What do boards know about ESG? Not much, says study
Should you have missed the NYU Stern’s Center for Sustainable Business research on the environmental, social and governance (ESG) credentials of board directors, we’ve put together a neat summary of its striking findings. And should you have read the report, you may still find its visual representation rather punchy.
It turns out that board members of some of the US’s largest companies do not have much to show when it comes to sustainability. NYU Stern looked into the biographies of the 1188 directors sitting on Fortune 100 companies’ boards, as they appeared on Bloomberg and corporate sources in 2019, and found that only 29 per cent had some ESG credentials. Not bad, you say, for a relatively new area? Well, as the report’s authors point out, looking at the individual components of the three categories forming ESG paints a less rosy picture.
The majority of skills come from the ‘social’ category, the S, with 21 per cent of the total, while the E and the G account for only 6 per cent each. (Some directors have experience in more than one area, which explains the 29 per cent total). With climate change such a pressing concern, that 6 per cent looks rather worrying.
A deeper dive reveals even more uncomfortable ratios. The most populous individual credential group is workplace diversity: only 5 per cent of the total. While only 1.2 per cent of board directors have experience in the energy sector, only 1.1 per cent count on credentials in economic or community development, and a nearly non-existent 0.3 per cent in ethics or corporate responsibility.
