The ‘G’ in ESG — How diverse in your board?

Most companies assume ESG metrics to be centred around social impact and environmental metrics.

The G — Governance metrics ensures that management is incentivised to perform on ‘E’ and ‘S’. It is essential for companies to ask the right questions and have a team that can provide a view of what the company’s portfolio should look like in the future.

Future Board Rooms need to prioritise sustainability

1. It is vitally important that governance is embedded into business and board functions so that sustainability work is not just a project or passing fad that disappears with the arrival of a new CEO.
2. There are increasing regulatory risks and consequences for companies and their boards around sustainability and environmental impact. As a result, board directors and senior business leaders must ensure that they have reasonable systems and controls in place to enable oversight and mitigate risks.
3. The board’s oversight of the management team is crucial for how sustainability is integrated and brought to life in companies. Board directors need to understand the concept of sustainability to be able to provide effective oversight. The education process requires continuous learning, feedback and open, regular communications with stakeholders.
4. Board assessments can help to evaluate the skills and competencies needed in a future boardroom and identify strategic challenges and opportunities. These assessments can also help identify board members who may need to resign or change their skill sets in order to continue providing value to the company.
5. Education will play a major role in the transition to a future boardroom. Investors are increasingly zeroing in on directors’ knowledge of sustainability issues and may not vote for those who lack insights and knowledge.
6. If board members can proactively rather than reactively address ESG factors, that will also be a major asset for companies in terms of outpacing competitors and creating renewed value.

Being a board director is not just about dealing with short-term financial goals, but also about being a steward of the company’s finances, its employees and its impact on society and the environment. In order to add sustainability expertise to a board, that individual must understand what the board is looking for, be able to think strategically and understand corporate governance.

Greenlane can help companies address all the ‘G’ disclosures in ESG so that boards have a better understanding of operations and sustainability to be able to maximise opportunities and minimise risks. We can also customise a dashboard to help management track and measure their progress in ‘E’ and ‘S’ metrics.

www.greenlane.co.in