COVID-19 is proving to be a gamechanger for corporate executives, directors, and others responsible for overseeing ESG risks. This pandemic is underscoring the significance of issues as diverse as how companies treat their employees (human capital management), the impact of climate change and efforts to promote sustainability, supply chains, and executive compensation. On the investor side, this is reinforcing the need for accurate data about corporate performance, as well as the governance oversight, around these topics.
ESG Trends Post-COVID-19
Climate change has been at the forefront of ESG issues for the past few years. Climate change remains a high priority amid COVID-19, and as companies continue to navigate an uncertain economic landscape and plan to resume operations, they must bear in mind that scrutiny of board oversight of ESG and the overall handling of the risk function are more challenging and critical today than ever before. In addition, this heightened scrutiny has important implications both for company and board practices, as well as for company disclosures about these practices.
When considering board oversight of ESG, it’s worth remembering that while interest in oversight was gaining momentum before the pandemic, the rate of change recently accelerated.
Now that the world seems to grasp how deeply individuals and institutions are interconnected, recognition for the significance of ESG is expected to accelerate. As companies make changes to both strategies and operations to adjust to “the new normal,” they are focused on employee health and safety, business continuity, crisis management, capital liquidity, and supply chain challenges, to name just a few areas of intense concern.
This white paper traces the increased attention given to ESG that began before COVID-19 and provides a disclosure-based review of the growth in board oversight of ESG. It also provides innovative examples from the 2020 proxy season for ways companies are strengthening their own ESG governance practices and disclosures to meet the challenges of a post- COVID-19 world.