Environmental & Social issues attract significant attention and resources these days. A new memo from shareholder advisory firm SquareWell Partners (download required) suggests that it may be time to reassess priorities – and put Corporate Governance first. According to the report, that’s because:
“Governance” should be viewed as the means of facing environmental and social risks and opportunities, not as an isolated element from this effort. One should not forget that the first recommendation of the Task Force for Climate-Related Financial Disclosures (“TCFD”) requests that companies disclose their governance structure around climate-related risks and opportunities.
Governance is a structural property of a company, and the foundation to set a company’s purpose, strategic direction, ability to perform, and most importantly, uphold its ultimate responsibility, to be accountable.
SquareWell is taking a particularly strong stand, saying it will be “shifting our identity away from an advisor in the ‘ESG space. Going forward, we will work to support our clients to be governed in a way that ensures sustainability.”
With governance at the forefront, SquareWell urges companies and boards to do two things in light of current investment decision-making trends, in order to protect against reputational & business risks and potential dissidents:
- Consider “ESG” disclosure as a bare minimum to satisfy the requirements of the market
- Communicate a robust equity story that highlights the opportunities to be seized in light of key E&S megatrends (decarbonization, digitalization, etc.) to attract active managers that allocate capital to fund your “story”
For more tips on establishing governance structures to navigate the most concerning E&S issues, mark your calendar for May 10th at 2pm Eastern. We will be hosting a webcast on this very topic – “Putting the ‘G’ First: Oversight of ‘E’ & ‘S’ in ESG“. Sunrun’s Sundance Banks, Orrick’s JT Ho, Delta Air Lines’ Stephanie Bignon and American Express’s Kristina Fink will share their insights on prioritizing governance and overseeing E&S issues. You can attend the webcast for free if you are a PracticalESG.com member. Otherwise, registration fee information is available on the webcast page – but remember that the incremental cost of a membership gets you much more bang for your buck.