Responsible for the strategies and actions adopted by their organizations, the boards of directors of companies have to assume, as in matters of reputation, the responsibility of the ESG agenda on their agenda. An article published on the official website of the World Economic Forum, authored by Shai Ganu, director of Willis Towers Watson, shows that measures available to Boards of Directors play a significant role in ensuring that companies can meet the demands and needs of stakeholders in a global environment defined by high expectations for doing good and right.
Equity, diversity, inclusion, environmental responsibility, ethics and governance are an inseparable part of running organizations
It is up to the board to guide the company's ESG journey amid business challenges and find the balance between short-term returns and long-term sustainability.
There are steps related to ESG goals that boards can take to meet rising expectations and put organizations on track to successfully complete the journey.
Article indicates five actions:
1. Incorporate ESG into business strategy
It is not enough to treat ESG as an initiative or activity, it is necessary to make it a central theme in everything the organization does, as it is linked to how the company's profits are obtained and its responsibility in the value chain. Thus, boards must embed ESG and sustainability into the very structure of the organization
2. Recognize as one of your responsibilities
Board members need to quickly update themselves on scientific advances in ESG practices. It is important to consider creating ESG or sustainability committees to delve into these issues.
3. Set ambitious, science-based goals
It is important that companies begin to assess their current state of compliance with ESG precepts, including to define adaptations and improvements. It is possible to draw from short-term goals to aspirational ones with longer terms to move forward in the right path.
4. Build support at all executive levelss
To accelerate change, it's important to share the company's ambitions internally and externally. Linking ESG policies to employee and executive compensation, setting clear expectations for management, is a proven way to ensure alignment with ESG goals.
5. Recognize that ESG is more than disclosure
Companies must respond to changing and evolving disclosure requirements and standards. And they also have to consider that ESG brings considerable financial and non-financial opportunities, increased market value and customer retention, for example.
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