BDO’s “Spring 2023 Board Pulse Survey” revealed the following (among other) key takeaways based on a February 2023 survey of more than 200 public company directors.
Risk rankings—Economic volatility tops the list of risks to the business, with half of directors indicating that this poses a significant risk and 45% saying it poses some risk.
While ESG matters were ranked last on the risk list (with just 1% of directors equating it with significant risk and 60% identifying the risk as minimal), specific ESG-related topics garnered a seemingly contrary response (illustrating one of the problems with the use of the all-encompassing term “ESG”). For example, talent shortage and data breach were identified as posing some or significant risk by 92% and 79% of directors, respectively.
Sustainability—About half of directors characterized their company’s maturity on their sustainability journey as “early stage.” The ESG-related topics identified by directors as most aligned with long-term value were cybersecurity and data privacy; fair labor, development, and diversity practices; and enhanced corporate governance policies and procedures.
Directors are thus far not perceiving significant benefits to the business from the company’s engagement in ESG initiatives:
Executive compensation—Most directors identified aligning the company’s compensation policy with its strategic direction and enhancing compensation communication and disclosures as near-term priorities (75% and 57%, respectively). In contrast, a plurality of directors have not prioritized, and have no plans within the next three years, to integrate executive compensation into discussion about company risk or design ESG-linked pay metrics.