The Sustainability Board recently published its 2023 Annual ESG Preparedness Report that presents a survey of 100 largest public companies based on the 2023 Forbes list. The survey is intended to provide information on whether “boards have formalised ESG oversight as part of their duties, established a sustainability committee or delegated ESG to another committee, and the materiality and quality of their oversight policy.”
The survey differentiates between “sustainability” and “ESG”:
Sustainability: Refers to practices, principles, and activities that support the well-being of all humans and life forms on Earth.
ESG: Represents a business’ approach to addressing environmental and social challenges, as well as the governance structures in place to manage these issues.
The report notes progress has been made, while challenges continue:
“This year’s findings illuminate both strides made and challenges ahead. There is significant growth in sustainability governance, increasing from 50% in 2019 to 88% in 2023. This means, more boards have adopted sustainability oversight as part of their current committees or dedicated a specialist committee to it. However, stagnation in ESG engagement levels among directors indicates a need for renewed focus on individual sustainable leadership capacity.”
Two useful recommendations from the survey:
“Most boards still only meet four times a year. Considering the urgency and impact of the sustainability challenge— meeting frequency might need to be increased.
It might also be necessary to give directors access to ‘aides’ sitting in different divisions of the business, and to external educational and other resources.”
ESG/sustainability staff should be prepared to increase the frequency and expand the content of their board education efforts. One helpful approach to effectively educating directors is to prioritize clarity and simplicity of your message, which is the topic of a short blog series this week (Part 1 is here).
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