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      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
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Modernizing Governance: The Board’s Role in ESG!

Modernizing Governance: The Board’s Role in ESG!

By CS Divya Momaya
Calendar

Mar 24 th 2021

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Sustainability has become one of the mainstream discussions in todays’ corporate world. The Financial Times Lexicon defines ESG as “a generic term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies.” The ESG components are taken into account as factors that help ascertain investment decisions and risk management with sustainability lens within the organization. The primary objective is to build the culture that encourages to achieve business standards that are more conscientious and more likely to succeed in the long-run.

It is interesting to know that stakeholders are taking great interest in recognizing and understanding Environment, Social and Governance (ESG) issues to formulate robust business strategies and come up with ideas to help businesses grow. However, at the same time, Boards are still concentrating on the short-term gains rather than focusing on the long-term sustainability of business. The concept of ‘corporate purpose’ provides the impetus that the Boards need to focus more on ESG concerns and learn to effectively manage the long-term success of their businesses. It is important for the Boards to understand that adaption to socio-economic and environmental changes will help in better identification of strategic opportunities and meet competitive challenges. Proactive and integrated ESG policies can widen a company's competitive moat relative to other industry players.

In the Indian context, very few management leaderships understand the need to identify and manage ESG impacts and risks. Boards have the responsibility to influence management to enhance the organization’s approach towards ESG. This is not just about building public relations and creating branding, but also a question of business performance and long-term value of the Company. In order to attain the same and introduce a robust approach towards ESG, Boards must consider following practices:

a.      Request for a formal ESG Assessment

An effective sustainability reporting allows companies to identify potential risks that may affect businesses in both short as well as long run. This appropriate identification would help companies to prepare themselves and help Boards to strategize according to their risk appetites. An ESG inventory and formal risk assessment should extend beyond the routine organizational operations and take inputs from both internal as well as external stakeholders of the Company. The assessment should cover the complete supply chain, the extended enterprise and strategic considerations such as resource accessibility, usage, and sustainability, talent recruitment, engagement and retention, financial performance, risk and reputational impacts. The assessment should not only identify and rate all risks, but also consider how those risks interrelate at the enterprise level. This activity will give organizations a great perspective towards building best practices suitable for their businesses.

 

b.     Encourage more proactive Corporate Transparency and Disclosures

An effective ESG reporting broadens the scope of organizational disclosures beyond mere financial reporting. It helps Boards to evaluate environmental as well as social metric to formulate appropriate strategies taking into account all the relevant factors affecting businesses. Further, it also helps in setting an important parameter for investors and other stakeholders to judge the working style of the Company as well as mindset of the top management towards culture, innovation, transparency and integrity.

 

c.      Encourage management for active Stakeholder Engagement

Sustainability reporting always helps in creation of a brand and gain stakeholders’ trust. Therefore, it is extremely important for the Board and the Senior Management to constantly engage with the stakeholders to make them feel an integral part of the Company and its activities. This act of Board and robust ESG reporting will further help in building great communication channels amongst the Company and stakeholders thereafter leaving no scope for miscommunication or misrepresentation of any information.

 

d.     Establish ESG specific roles and responsibilities

Once organizations have identified and assessed specific ESG impacts, risks and opportunities, the senior management and the Board are better positioned to set and pursue long-term objectives specific to ESG. As a matter of trend for the companies which understand ESG as an important element, have appointed a Chief Sustainability Officer for undertaking the ESG related responsibilities, while others have given the CEO or other C-suite executives explicit ESG responsibilities. From a Board perspective, ESG is most often overseen either completely at the Board level or by the Risk Management Committee constituted by the Board. It is highly recommended that in order to gain better outputs on ESG implementation and reporting, a mix of appropriate people from the Board, Risk Management Committee and Audit Committee should initiate and strongly support efforts to provide high-quality ESG assurance to the stakeholders of the company.

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Category

  • All
  • Boardrooms
  • BOARDROOMS
  • Independent Directors
  • Role of Board
  • Mindset Shifts of Boards
  • Independent Directors and Promoters
  • Sustainability / ESG
  • business implication
  • employee exits
  • COMMITTEE MEETINGS
  • Union Budget
  • Independent Director
  • Grow with Governance
  • Grow with Governance
  • INDEPENDENT DIRECTOR
  • Entrepreneurial Board
  • ESG & ITS IMPORTANCE
  • leadership coaching
  • Change Management
  • Advisory Boards
  • Boards
  • Boardroom
  • Brand Yourself as a Leader of the Company
  • Kindness
  • Are you hesitant to speak in the Boardroom!
  • Governance & ESG
  • Directors
  • Independent Directors
  • Corporate Governance
  • Leader development
  • Gratitude, Purpose
  • decision making
  • Systematic Investment Plans in Emotional Intelligence
  • Corporate Governance
  • The Board’s Role in ESG!
  • Balance Boards
  • Agility and Compassion
  • Governance and Board
  • Diversity and Inclusion
  • Directors,Promoter Directors
  • Board Members, Directors and Independent Directors
  • Board and Senior Management
  • New Directors
  • Cyber Insurance
  • Salary Increment
  • Economy Growth
  • Human Resources
  • Generating Wealth Beyond Money
  • Agile Mindset for Leadership
  • Aspiring Independent Directors
  • Board Leadership
  • Corporate Governance & Women on Boards
  • BOARD MEMBER
  • SME
  • WOMEN DIRECTOR
  • BOARD MEMBERS

Archive

  • 2021
    • April (3)
      • Will you drive your vehicle without a dashboard?
      • Are you making SIPs to improve your Emotional Intelligence
      • Corporate Governance needs a Moral Compass – Ethics in Indian Boardrooms!
    • August (9)
      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
      • The winding road of leadership coaching in the post-pandemic era
      • Challenges of Organizational Culture Change
    • February (4)
      • Re-examination of Purpose by the Boards in Post -Pandemic Era
      • What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors
      • Promoter Director – Time to become Custodian of Governance!
      • Diversity and Inclusion – The Board Perspective!
    • January (2)
      • New Directors - Have you done your due diligence
      • Cyber Security Insurance and Boards
    • July (7)
      • Why Advisory Boards Are Important for Indian Business Corporates?
      • Grow with Governance: ESG essential to repair the damage economic activities caused to the earth, says CA Shailesh Haribhakti
      • Top 10 areas to contribute in Boards as Independent Directors
      • Top 10 Questions to Ask in Boardrooms!
      • Essential HOWs of Boardroom!
      • Kindness is key
      • How to Brand Yourself as a Leader of the Company?
    • June (6)
      • Leading from the Boardroom
      • Are you hesitant to speak in the Boardroom!
      • The Neem Project a Leadership case study
      • Directors Liability in India
      • Why do promoters need Independent Directors?
      • Corporate Governance Deviation – Infosys Case Study
    • March (4)
      • Board Refreshment: Finding the Right Balance for your Board!
      • HR Governance and Board – How Important Is It?
      • Agility and Compassion: Two Pillars for Boards in the Post Pandemic Era!
      • Modernizing Governance: The Board’s Role in ESG!
    • May (3)
      • Restructuring appraisals in 2021 – Gratitude, Purpose & Meritocracy
      • How do you make your personal Brand?
      • Leadership Coaching: How does it help Leaders
    • October (2)
      • Are Independent Director’s required on the Board?
      • 'Ethics & Governance' lesson should start from school, says Federal Bank's Independent Director, Sankarshan Basu
    • September (3)
      • Grow with Governance: As an Independent Director ensure your voice is heard, says Apurva Purohit
      • Grow with Governance: Push for ESG agenda; pool CSR funds to maximise impact, says Ranganath NK, former MD of Grundfos Pumps
      • Grow with Governance: Boards should prepare companies for different risks, says National Insurance Academy's G Srinivasan
  • 2020
    • August (4)
      • WOMEN DIRECTOR-An Emerge
      • ARE YOUR BOARD MEMBERS SAVVY WITH FINANCIAL TERMS AND EXCEL IN FINANCIAL LITERACY QUOTIENT AS PER COMPANIES ACT 2013 MANDATES.
      • BOARD MEMBER SELECTION- A TASK OF PERFECTION
      • SME IPO – AN OPPORTUNITY TO CAPITALIZE YOUR BUSINESS
    • December (3)
      • Good or bad, Salary Increments always cause a heartburn among employees
      • Is Economic Progress Enough?
      • Emotional Intelligence
    • November (3)
      • Generating Wealth Beyond Money
      • "Agile Mindset for Leadership"
      • Tips for Aspiring Independent Directors
    • September (3)
      • Independent Director
      • Lean Thinking Boards
      • Corporate Governance & Women on Boards
  • 2022
    • August (1)
      • Liability of Independent Directors – An Important Aspect of Corporate Governance
    • February (4)
      • A Hero's Farewell: How to handle employee exits with dignity
      • Green Bonds: An Instrument for Financing a Sustainable Future
      • Tool for effectiveness of Board Committees - Ask Right Questions
      • Russia-Ukraine war and India’s Business Implication
    • July (2)
      • Stagnation or Evolution – Mindset Shifts of Boards when Company sees Stagnated Growth
      • Risk Assessment and Minimization Procedures – Role of Board
    • March (2)
      • A study on Sustainability Report of Container Shipping Companies.
      • India and The ESG impact of Crypto Currencies
    • May (1)
      • Independent Directors liability under GST
    • November (1)
      • Workplace Sexual Harassment and the Role of Board
    • October (2)
      • How many Boards are too many?
      • Women in Indian Boardrooms Vs Diversity = Inversely Proportionate
    • September (2)
      • Organizing for the Future – Important keys to becoming future ready
      • Are you ready to serve on the Board?