Boards see opportunities in environmental and governance areas for more effective ESG oversight
12 July 2023 - 12:58AM
A majority of board members worldwide (75%) agree that a coherent
environmental, social and governance (ESG) strategy helps to create
sustainable organizational value and stronger financial outcomes;
however, many corporate directors believe there are limited
resources available to help tackle the specific areas of governance
and environmental issues. This is according to a survey of 349
board members at global organizations conducted by WTW, a leading
global advisory, broking and solutions company, and the Nasdaq
Center for Board Excellence, a convener of board and executive
leaders dedicated to advancing governance excellence in the
boardroom and beyond.
The top factors influencing board members to prioritize
sustainability themes are alignment with business strategy (85%),
moral and ethical reasons (78%), long-term organization value
creation opportunities (74%) and business reputation among
stakeholders (73%). Over half of respondents cited
shareholder/investor attraction and expectation as a factor.
“Board members are evolving their ESG agenda from reacting to
stakeholder pressure to proactively linking ESG to business
strategy,” said Kenneth Kuk, senior director, Work & Rewards,
WTW. “As a result, we are seeing greater interest in addressing
skills and resource gaps and more emphasis on oversight of emerging
risks.”
Most companies currently rank social – human capital (82%) and
governance (70%) areas in their top three ESG priorities. But only
half of organizations rank environmental - climate in the top
three. While companies report a minor skills gap in the areas of
social and governance, half of organizations (48%) report room for
improvement with respect to skills and knowledge base for dealing
with environmental - climate concerns, revealing an opportunity to
enhance current skills and knowledge in this priority area.
The survey also reveals the need for stronger governance in the
boardroom. Only three in five respondents think their board has
dedicated sufficient time and resources to this area. This exposes
the company to a range of risks, including cybersecurity and data
privacy and management, succession planning and board
effectiveness.
Nevertheless, as boards’ oversight rapidly increases, companies
are acknowledging a need for specialist responsibilities in the
coming years. While oversight of comprehensive governance topics
will continue to be a full board matter, more organizations expect
to have a dedicated ESG, corporate social responsibility or
sustainability committee in the next three years.
The Nasdaq Center for Board Excellence (the “Center”) and WTW
joined forces to provide insights into modern boardroom dynamics to
help boards find new ways of assessing and improving effectiveness.
The Center promotes a culture of innovation, curiosity and
long-term value creation for like-minded leaders to drive positive
and meaningful impact. Through resources and experiences, the
Center seeks to advance the overall quality of corporate governance
across the expanded governance community.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led
solutions in the areas of people, risk and capital. Leveraging the
global view and local expertise of our colleagues serving 140
countries and markets, we help organizations sharpen their
strategy, enhance organizational resilience, motivate their
workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover
opportunities for sustainable success—and provide perspective that
moves you.
Learn more at wtwco.com.
Media contact
Ileana Feoli: +1 212 309 5504
Ileana.feoli@wtwco.com
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