Surveys Suggest Board’s Willingness To Implement ESG Strategy Is Growing

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Boards may want to consider how several different sources have come to similar conclusions about ESG strategy.

A flurry of recent surveys is highlighting the challenges corporate boards are facing as they try to create effective strategies to deal with ESG issues. Despite persistent anti-ESG sentiment in some segments of society, these surveys reveal corporate directors are realizing that environmental, social and governance issues impact almost every aspect of their companies. This enlightenment has produced some interesting trends that corporate board members might want to take note of:

Global advisory firm WTW and Nasdaq recently surveyed 349 board members of global organizations and found that 75% agreed that a coherent environmental, social and governance strategy helps to create sustainable organizational value and stronger financial outcomes. This suggests that ESG strategy is becoming a higher priority for many boards.

“Board members are evolving their ESG agenda from reacting to stakeholder pressure to proactively linking ESG to business strategy,” said Kenneth Kuk, senior director, Work & Rewards, for WTW in a statement. “As a result, we are seeing greater interest in addressing skills and resource gaps and more emphasis on oversight of emerging risks.”

The WTW/Nasdaq survey also reported that more organizations expect to have a dedicated ESG, corporate social responsibility or sustainability committee in the next three years. Companies might want to consider establishing such a committee on their board if they haven’t already.

Nasdaq also recently released its 2023 ESG and Climate Survey, which polled 100 ESG decision-makers and found that 45% of companies have been tackling ESG strategy for fewer than three years. Furthermore, only 9% of companies have been tackling ESG for more than five years. This statistic suggests that a large percentage of companies aren’t dealing with ESG strategy at all even though at least one survey respondent with an ESG team said that almost every department in the company dealt with ESG at some point. Each corporate board will need to take into account how information from finance, IT, human resources, operations, marketing and investor relations may play a role in developing a comprehensive ESG strategy for its company.

Although a lot of companies must improve their handling of ESG, the Sustainability in the Spotlight report from the Diligent Institute and Spencer Stuart, which surveyed nearly 1,000 corporate directors around the world, predicted that corporate boards will give much more attention to ESG in the near future. According to the report, 90% of organizations have incorporated environmental goals or metrics into their business, and 87% have done the same for social goals/metrics. Additionally, the report stated that 29% of respondents said they would give a more concerted effort on ESG initiatives in the next five years, and 18% predict stronger linkage between ESG initiatives and business impact.

“These findings suggest that boards are taking sustainability seriously, and looking for greater clarity into how it factors into their overall corporate strategy,” said Lisa Edwards, Executive Chair of Diligent Institute in a statement.

Corporate board members may want to consider how several different sources have come to similar conclusions about ESG strategy: it does have an impact on the success of a business.

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