ESG (Environment; Society; Governance) is now firmly embedded in our consciousness. It’s grown, emerged and evolved in the last 12 months as we plot a greener and more sustainable recovery out of the pandemic and seek to identify and explore new opportunities. The environmental and societal aspects of this are clear – albeit something that must be carefully and authentically considered by organisations and their leaders. But what of governance?
I was recently asked to develop the terms of reference for a new Board Committee focused on ethics and responsible business, designed to underpin the evolving regulatory and reporting requirements and to ensure that the corporate purpose was enshrined in board discussions and strategy. As always, I diligently carried out research to look for examples of organisations that are really leading the way and research focussed on how best to establish a forum that would have impact and make a difference. While there is significant material on many aspects of ESG, there is little to guide thinking on governance.
Good governance is the bedrock of a successful business. It provides the foundation for growth and the confidence to take brave decisions. It reassures investors, regulators and other stakeholders. It provides a strategic torch to focus the minds of directors and management on the most critical issues. It underpins the “licence to operate”. All of this is true in all situations, but never more so than when focused on environmental and social impacts.
I believe there are a series of questions we should be asking of leadership teams that will enable them to demonstrate they have properly considered whether their governance structures and procedures support and embed their ESG ambitions and purpose statements:
I would love to get feedback on these suggestions: what’s missing; where are improvements required; and are there areas where governance is this context differs from the wider understanding?
AUTHOR.
CAROLYN CLARKE.
