For many, the term “ESG” brings to mind environmental issues like climate change and resource scarcity. These form an element of ESG—and an important one—but the term means much more. It covers social issues like a company’s labor practices, talent management, product safety and data security. It covers governance matters like board diversity, executive pay and business ethics. But as we discovered two years ago, there is a divide amongst stakeholders on how to manage and communicate it and what the term even means.
So, we have this issue covered from all angles—whether you’re an investor, a board member or a member of management.
Investors are increasingly aligned through a desire to understand a company’s long-term value creation plan and receive credible, standardized information to support long-term risk assessments. But many corporates, even when they have a good story to tell and robust processes to manage ESG risk, are not giving investors the right information in the right format. A few straightforward steps could bring the two sides together.
Environmental, social, and governance (ESG) issues continue to be a priority for shareholders. Investors are urging companies to build ESG considerations into their long-term strategy, bringing it up during engagements and using shareholder proposals to force companies to take action. What do directors need to know about the issue, and what can they do to help bring the two sides together? We explain.