Independent researches from major institutions and rising expectations from Shareholders and Stakeholders make it obvious that Environmental, Social and Governance concerns are vital factors for Corporate Sustainability. However, Organizations and Boards are moving at varied speeds in addressing ESG concerns, with the strategic importance of ESG varying widely by Company and by industry. An innovative and agile approach towards ESG performance creates opportunities for Companies to set themselves apart due to reduced Operational Risk, lower cost of Capital and reduced Operating costs through improved natural-resource management.
Faced with these Challenges, Risks and Opportunities, Boards globally have started to review their Sustainability Strategy, Operational and Reputational Risk and Regulatory Compliance. With this post, we discuss the 3 major ways Boards across all Industry Verticals can align ESG policies with Business Sustainability & Growth.
Build robust methodologies for early identification of ESG related Risks
Unexpected and high-impact ESG-related Risks can be significantly damaging to a Business growth. The consequences can range from Company-caused Environmental disaster to Fraud Risk and many more. Given the high stakes, Boards should ascertain that the Senior Management and the C-Suite is systematically monitoring ESG performance, looking for ways to turn ESG into a competitive advantage and regularly Reporting to the Board on the status of ESG Performance in the Company.
Assess ESG management readiness of the Top teams across departments
The escalating importance of ESG performance calls for a number of interdisciplinary and cross-functional competencies that include familiarity , intuitiveness and easy adaptability with Technological and Process advances and an understanding of emerging trends in ESG and their impact on Business and the Industry segment. Boards need to assess and re-assess the readiness quotient of the top teams in terms of adapting to the changing Business requirements.
Have the ability to accelerate ESG performance
In the era of continuously expanding Risk Universe, constant disruption and fleeting competitive advantage, performance surely depends on the ability to accelerate, efficiently harness resources, experiment and innovate and identify opportunities and threats. Instead of just monitoring and tracking ESG Performance, Boards need to act as transformational triggers to accelerate ESG performance.
Effective performance on ESG issues at all levels of senior leadership—the board, C-Suite, and the Senior management, leads to substantial benefits that can increase investor confidence, enhanced brand reputation, lower insurance payments, lower operational costs and avoidance of non compliance penalties. Above all, excellent ESG performance renders a competitive advantage over to any Business ensuring sustainability, growth and success.
Join our Chairman Bhavesh C. Bhagat at the 2018 NACD Global Board Leaders’ Summit on October 2nd in Washington DC , where he shares useful insights on ESG Strategies along with fellow Directors from different Industry Verticals.
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