Governance Challenges 2017: Board Oversight of ESG

In brief: Studies have shown a link between the inclusion of environmental, social, and governance (ESG) concerns into corporate strategy and improved long-term corporate performance. Environmental risks such as climate change not only affect current company operations but also are poised to have a profound effect on future operations, making it all the more important for corporations to take the time now to make sustainable choices for the long term.

This edition of Governance Challenges was produced in collaboration with NACD’s five strategic-content partners—Heidrick & Struggles, the KPMG Board Leadership Center, Marsh & McLennan Companies, Pearl Meyer, and Sidley Austin LLP—and assists directors as they attempt to meet additional responsibilities associated with considering ESG factors when setting company strategy and risk.

Boards can use this resource to

• ensure the board and executive team have the right skills for driving ESG performance;

• connect environmental and social issues to the company’s business mission;

• communicate the company’s environmental and social efforts to investors, and to stakeholders;

• understand the financial impact of climate risks and improve related disclosures; and

• link compensation to financial results and ESG factors.

Most relevant audiences: ESG/CSR committee members, risk committee members, audit committee members, and compensation committee members