Directors Prioritize Doing Business More Responsibly as Investors Increase Their Focus on ESG

Arlington, Virginia, UNITED STATES


WASHINGTON, Sept. 22, 2020 (GLOBE NEWSWIRE) -- The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 21,000 directors, today released Strategic Oversight of ESG, a primer for boards seeking to better understand environmental, social, and governance (ESG) issues.

NACD developed this resource in part at the request of directors who are becoming increasingly aware of the importance of ESG to investors, consumers—and their company’s bottom line. Specifically, in the 2019–2020 NACD Public Company Governance Survey, nearly 80 percent of directors reported that their board is focused on some aspect of ESG, with 52 percent seeking ways to improve their own understanding of their company’s ESG performance.

“ESG is an enterprise-level risk and should be viewed through the lens of strategy and core operations,” said Peter R. Gleason, NACD CEO. “Boards need to continuously assess their effectiveness in addressing ESG risk, in terms of both their own fiduciary responsibility and their oversight of management’s activities.”

To arm boards with the latest information and strategy around ESG, NACD interviewed company directors and sustainability executives representing a wide spectrum of companies varying in size, maturity, and industry. The report includes a discussion on challenges and solutions regarding the following findings:

  1. Management and directors must work together to create an organization-specific definition of ESG that is rooted in corporate strategy and company performance.
  2. It is critical to incorporate ESG into the company’s overall company strategy to help focus company resources on the most important business areas.
  3. To move from passive governance to a more active posture, the board should strongly encourage continuous learning about ESG and related trends at both the full board and the individual level.
  4. To address increasing external expectations, boards must engage with investors to understand their expectations and report the current state of the company’s ESG oversight.

Other topics of interest from the primer include the evolution of ESG along with an explanation of key terms, a snapshot of how companies have reduced costs or created new revenue streams by focusing on ESG, considerations for which committee should own ESG oversight, and key themes stemming from investor engagement.

To learn more, download the primer by clicking here, and to see additional resources from NACD on ESG, click here.

About NACD

The National Association of Corporate Directors (NACD) empowers more than 21,000 directors to lead with confidence in the boardroom. As the recognized authority on leading boardroom practices, NACD helps boards strengthen investor trust and public confidence by ensuring that today’s directors are well prepared for tomorrow’s challenges. World-class boards join NACD to elevate performance, gain foresight, and instill confidence. Fostering collaboration among directors, investors, and corporate governance stakeholders, NACD has been setting the standard for responsible board leadership for 40 years. To learn more about NACD, visit www.nacdonline.org.

Contact:
Susan Oliver
susanboliver@gmail.com
703-216-4078