A recent survey conducted by Corporate Board Member and Nasdaq of 311 public company directors about how ESG is being addressed in the boardroom revealed these and other noteworthy takeaways:
Board oversight structure—A majority of boards delegate ESG issues to one or more committees. By topic, 38% of boards retain oversight of environmental and social issues at the full board only, compared to 27% of boards that retain full board only oversight of governance issues.
Shareholder engagement—The board chair/lead director is most commonly tasked with representing the board in shareholder engagements on ESG matters (43%), while more than one-quarter of respondents said board representation depends on the matter and the shareholder.
Committee reports to the board—Committees with ESG oversight responsibilities report progress toward goals, recommend strategic goals and metrics, and provide educational information to the board on their areas of oversight.
Board education—Boards most commonly (32%) look to internal ESG experts (e.g., CSO) for education on ESG matters, followed by the GC/corporate secretary (21%).
Progress indicators—Most boards (68%) rely on company-specific metrics/frameworks to measure the company’s progress on ESG goals, although more than 40% also or instead look to SASB, and nearly one-quarter use other frameworks (GRI, TCFD, CDP) for this purpose.
Understanding of risks & opportunities—A plurality of directors rated their level of understanding of the company’s environmental and social (diversity and human capital) risks and opportunities as “advanced.” Notably, 18% and 21% of directors rated themselves as experts as to diversity and human capital, respectively, compared to just 5% who rated their understanding of environmental risks and opportunities at that level.
Priorities—A majority of directors described enhancing their oversight of environmental and social issues, and enhancing their governance practices, as important—but not pressing, and not a top priority.
Targets & timelines—A plurality (nearly 40%) of directors reported their companies having set environmental and governance targets with defined timelines for achieving those targets. This compares to a plurality (40%) of directors indicating their companies set social targets without a defined timeline.