By: Anuj Saush, ESG Center Leader, The Conference Board

The answer to the question of whether the board of directors have a critical role to play in a company’s ESG success is a resounding “Yes.” Now, companies must determine how to best use the board’s decision-making, oversight, and advisory capacity to build a more sustainable organisation.

It’s not a straightforward path – for instance, hiring directors who specialise in sustainability can be counterproductive if the rest of the board defers to them too much. Rather, directors should have a clear understanding of their various roles related to ESG and deep knowledge about their industry, as that combination unlocks effective oversight and advancement of ESG-related risks and opportunities.

Incorporating ESG and stakeholder perspectives into existing board processes involves mapping the board’s current roles and responsibilities by taking inventory of the board’s current approach to and knowledge of ESG issues and stakeholder views. Once that inventory has been taken board responsibilities can be allocated among several board committees to avoid overburdening a single committee. Either the Board as a whole or a board committee should oversee coordination of the board’s ESG engagement, ensuring corporate governance documents are up to date and handling committee rotation and committee chair succession.

Management should also set reasonable expectations around board members’ understanding of and fluency on ESG topics, as there are hundreds of areas of focus across all three categories. Board members cannot and should not be expected to have deep expertise in all of these areas. That said, the board should have a solid grasp of the depth and breadth of all internal and external ESG-related communications, as well as how management affirms that these communications are accurate and consistent.

A combination of direct board engagement and data are the best ways to keep the board informed about sustainable development. This engagement can be achieved through board discussions of the company’s purpose, by integrating ESG into the company’s overall strategy, and incorporating ESG topics into board level discussions of compliance and risk management.

It is not a one and done. As the board’s involvement in and support of the company’s ESG agenda progresses, it’s crucial that the approach is not a series of distinct single actions but rather, a fluid and continuous process.

Boards of directors already play a vital role in developing a company’s purpose, which gives meaning to the company’s existence. In turn, the ESG agenda ensures the company’s sustainability. Beyond building culture, boosting strategy, and raising value, ESG safeguards a company from various risks. When boards support management in efforts to make ESG a priority, it signals to employees, customers, and other stakeholders that the company’s purpose extends beyond profit and includes all stakeholders.

Anuj Saush is the Center Leader, ESG Center, Europe at The Conference Board.