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ESG governance is now an established imperative for boards; and a new report sheds light on steps companies should pursue to ensure the long-term viability of their organizations.
are rapidly transforming organizations and boardroom dynamics. Boards and
governance professionals need to equip themselves to understand the evolving
expectations of boards as society hurtles through the 21st century.
To help boards and their advisors get up to speed on this new governance trend,
Governance Professionals of Canada held a virtual
conference on the topic of ESG governance — which resulted in this
Over two dozen global experts in ESG governance and capital markets weighed in
with their views on why and how boards should update their governance mandates
to address accelerating ESG
and systemic risks. ESG governance is now an established imperative for boards,
and this report sheds light on steps companies should pursue to ensure the
long-term viability of their organizations.
ESG governance is now mainstream; and best practices
— boards and advisors can use them to update their governance models to
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There is a significant gap in board ESG competency, which can be addressed
through the recruitment of directors with ESG expertise and routine board
There is a trend in companies moving away from shareholder value creation
towards stakeholder value
and in companies adopting a societal purpose as the reason they
COVID-19 has accelerated
and paves the way for business model innovation and transformation towards a
more sustainable future.
Global regulatory ESG developments will raise the bar for companies that
need to keep abreast of these changes to reduce the cost of capital and to
The role of the board and governance professional includes:
Being proactive and not reactive
Going beyond ESG risk mitigation to value creation
Considering stakeholders in decision-making
Keeping on top of regulatory ESG governance trends
Prioritizing the S in ESG — including Indigenous rights, human rights,
employee rights, etc.
Finally, a number of panelists commented that ESG is moving from a focus on
reducing risks to one of creating value — in the future, companies and their
boards will need to think of ESG not just as a risk to the business but as a
future source of value. Companies will need to have positive stakeholder
relations and demonstrate their positive societal impact to thrive in the
For more on how boards can ensure their firms create stakeholder and societal
value, check out this companion report on Purpose Governance: A New Role for
With ESG governance now firmly entrenched as a board’s fiduciary responsibility,
the next governance frontier is for boards to have oversight over the firm’s
purpose – the reason it
Watch this space to see ESG and purpose governance become an established board
competency — unlocking business assets, resources and platforms for the greater
Published Dec 10, 2020 7am EST / 4am PST / 12pm GMT / 1pm CET