To (form an) Environmental Social Governance Committee or not to (form an) ESG Committee? That is the question (for boards)

Abstract

As ESG (environmental, social and governance) concerns continue to play a major role in business discourse, and given the breadth of the term, should boards be setting up ESG sub-committees to spend time with the detail? Is it such a hot topic that it requires whole board attention? Or is it simply a new phrase for responsible business that can be dealt with, as business-as-usual, between standing audit and risk committees? This article will explore some potential benefits and difficulties found in the use of ESG Committees, against the background of the recent publication of the Chartered Governance Institute's influential proforma terms of reference for an ESG/sustainability board committee and associated guidance. The article will review the role an ESG Committee might play in strategic governance, how its responsibilities must link to those of other committees, and the advantages and disadvantages of committee creation. The purpose of the article is to assist board members and their executive teams in discussion of these general issues in the context of what works for their organisation.