Corporate Boards are Behind the Curve
While interest in sustainability and ESG is on the rise within the financial services and broader investor community, corporate boards are lagging. In a Harvard Business Review article, Tensie Whelan, Clinical Professor for Business and Society at NYU Stern School of Business, shared the findings of research showing “that many boards have little ESG-related expertise and many do not even recognize the need to pay attention to material sustainability issues.”1 In fact, fewer than one-third of 1,188 board directors studied had ESG expertise and very few have experience in the most material issues for their sector.1
Current boards “have a preponderance of former CEOs on their boards. Those CEOs were in charge 10-20 years ago when ESG issues were not specifically identified as financially material and may burden boardrooms with an out-of-touch mentality.”1 However, in research conducted by PWC, female board members were found to be “more likely to say that material ESG issues like climate change and human rights should be part of business strategy.”1
On a positive note, board training on ESG topics is now available. Helle Bank Jørgensen, CEO and Founder at Competent Boards, has created the ESG Competent Boards Certificate Program and says, “I would look at the proxy statement and in the governance section on websites. In the coming months, you should be able to spot board of directors who have achieved the ESG Competent Boards Certificate and Designation (GCB.D).”2
Jeff also recently interviewed Caroline Abramo, Chief Investment Officer at Pana LCE (Low Carbon Economy) Investments, on TheIMPACT TV show. Caroline talks about the “Green premium” emerging with respect to company valuation, how fossil fuel companies are investing in technologies to help lower carbon, including sequestration, and the potential opportunities and jobs that could manifest from enacting sustainable infrastructure legislation.
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