{"id":7272,"date":"2022-06-07T11:38:50","date_gmt":"2022-06-07T00:38:50","guid":{"rendered":"https:\/\/insight.thomsonreuters.com.au\/legal\/?p=7272"},"modified":"2022-08-03T16:03:26","modified_gmt":"2022-08-03T05:03:26","slug":"how-companies-can-upskill-their-board-of-directors-to-meet-esg-expectations","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.com.au\/legal\/posts\/how-companies-can-upskill-their-board-of-directors-to-meet-esg-expectations","title":{"rendered":"How Companies Can Upskill Their Board of Directors to Meet ESG Expectations"},"content":{"rendered":"\n

Investors are calling for companies to develop the skills of their corporate board members to address critical ESG issues.<\/h4>\n\n\n\n

Investors are demanding in an ever-increasingly louder collective voice that C-suite executives of public companies and corporate boards future-proof their companies\u2019 business operations and assets to be more resilient in the wake of the climate crisis.<\/p>\n\n\n\n

Indeed, 64% of existing corporate board members say their strategy is tied to environmental, social & governance (ESG)<\/a> concerns, which is a 15-percentage point jump from 2020 to 2021. At the same, very few corporate directors, only 25%, say that their board members understand ESG risks well.<\/p>\n\n\n\n

Yet, ESG experts indicated that while the private sector has been slow to respond, regional, national and local government officials and regulators have not.<\/p>\n\n\n\n

Critical professional membership organizations are taking notice and advocating for action, for example. Brad Monterio<\/a>, member of the International Integrated Reporting Council, and current executive vice president of Member Competency & Learning at the Institute of Internal Auditors notes the progress made. \u201cThe events of the last year and a half and how quickly things have moved from the work of the Technical Readiness Working Group on prototypes towards the formation of the International Sustainability Standards Board and a proposed and requirements issued for public comment have been remarkable,\u201d explains Monterio, an ESG expert within the accounting and auditing profession who has been involved in corporate responsibility movement for the last 14 years.<\/p>\n\n\n\n

By contrast, he adds, it took international financial reporting standards a decade to take hold. \u201cI believe the intent and wish behind how quickly this has moved is for the standards to be adopted by companies and capital markets around the world possibly within the next 12 months,\u201d<\/p>\n\n\n\n

Board members ill-equipped to oversee climate risks<\/h2>\n\n\n\n

Pressure is mounting for public companies and corporate boards to respond to the potential costs of climate risk. However, the ability for public companies to identify and manage climate risks is in doubt, especially at the board level. Public companies need to reassess the current skillset of their directors and their ability to manage risks associated with the economic transition in business operations in the wake of climate change, according to corporate governance and investors.<\/p>\n\n\n\n

To date, corporate boards have mainly relied on external consultants for ESG advisory and education; but now it appears that the time has come to evaluate if the effectiveness of continuing this way is enough. Indeed, there is a growing belief among ESG experts and advisors of public companies that in order to meet the monumental task of ensuring the successful transition of business operations, given the predictions of climate shifts, the board must be composed of climate expertise as well as ESG expertise, more broadly.<\/p>\n\n\n\n

Multifaceted ESG approach necessary<\/h2>\n\n\n\n

Anthony DeCandido<\/a>, partner and co-leader of the sustainability service solutions practice for RSM US, a leading provider of audit, tax, and consulting services, is one of these ESG experts. DeCandido advises companies and company boards of directors to take a multipronged approach at re-skilling and upskilling board members to meet the demand of building and bringing in-house ESG expertise. Some of the strategies DeCandido suggests include:<\/p>\n\n\n\n

Take a grassroots effort to pinpoint individuals across company functions to be involved in ESG data collection and reporting to help re-skill themselves and others in this area. This can be achieved in two ways:<\/p>\n\n\n\n