Board of Directors
The biggest problem they see is that companies manage risk in silos and are not diligent about communicating with each other about the challenges their business faces. While risks are being managed, few companies look at the interdependencies.
of boards don’t believe management teams manage risk well, according to a recent EY survey.¹
What are the top 3 things the Board of Directors should activate immediately?
What is the Board of Directors’ responsibilities related to ESG risk?
Do this on day one
Develop a working committee with members of the board and management focused on the ESG risk strategy and governance framework.
Ensure accountability and oversight at the board level of the organization’s ESG efforts. Ensure the board understands how the company is revisiting and adapting its risk management strategy and management’s approach to the three lines model in response to ESG risks, including internal and external changes, changes in strategy and risk landscape, and the company’s operating model.
Lead by example with board composition
Ensure that there is gender and ethnicity representation on your board. If you’re a publicly traded company in the US, representation is required by NASDAQ’s Board Diversity Rule, approved by the SEC on August 6, 2021.²
Find people with ESG skill sets and experience
Boards are increasingly focused on which ESG risk factors are material to the company and how management is reflecting them in strategic planning and risk management. Ensure there’s an appropriate climate-related skill set on the board.