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Establishing ESG Related Committee

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Establishing ESG Related Committee

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Environmental, Social, and Governance (ESG) are among the most important themes in the world today. The ESG aspect of a business is more than risk management and staying ahead of the vulnerability curve. It can act as a catalyst to create opportunities and, also underlines a company’s ethics. The Environmental pillar measures a company's performance in managing environmental risks. Owing to the highly accelerated impacts of climate change, it is the most visible component of ESG to the stakeholders. The Social pillar of the ESG agenda measures a company’s relationships with multiple stakeholders like employees, suppliers, customers, and the communities where it operates. The Governance pillar assesses how a company is governed.

In this ever-changing world, it’s vital to explore the pressing business, economic and management issues faced by global executives and generate insights on these critical business topics. As per GlobalData, ESG will be the most important theme impacting businesses over the next decade. With that in mind, we ran multiple polls to understand the current sentiment of the business community towards ESG.

The "G" in ESG refers to the governance, which can be defined as a process and practice to make an effective and efficient decision in organizations which could be the distribution of rights and responsibility to the stakeholders including the board of directors, managers, and shareholders. It covers a comprehensive range of corporate activities including management structures, disclosure, auditing, and compliance. Investors are more interested in governance practices as this gives a window to look at the corporation's goals, the structure of boards of directors, shareholder rights, accounting practices, etc. so that they can identify the risk within the organization and can make a sound investment in the organization.

For good governance at the workplace, companies should establish committees related to ESG. According to the recent GlobalData polls, most of the respondents across regions and sectors feel that it is ‘very important for companies to establish ESG related committees at the board level.