Where Does ESG Oversight Fit on the Board?

David Martin is quoted in Agenda regarding the increased importance for companies to take up environmental, social, and governance (ESG) issues. Mr. Martin says that in his experience, larger companies are more likely to have greater exposure to ESG risks and reputations hinging on oversight of ESG issues, so the issues are more likely to pop up in full-board-meeting agendas. For smaller companies, he says, the board is more likely to ask the CEO to keep them posted, but not make ESG a regular topic on the meeting agenda.

He adds that by placing responsibility on its own board committee, ESG issues “won’t get diluted by other subjects a different committee has to deal with.”

Mr. Martin notes that where the responsibility lies will also depend on what expertise sits on the board. “The [expert ESG] voices are likely to be persuasive when trying to decide where responsibility should be placed,” Martin says. “I think various companies, boards and management teams have to make that decision, but do it with the leadership and input of the people that are more expert in it. And remember that no one size fits all.”