The Continuity, Insurance & Risk (CIR) Risk Management Awards honored WBCSD, the Committee of the Sponsoring Organizations of the Treadway Commission (COSO), EY and KPMG for their collaborative work on integrating ESG aspects into companies’ mainstream enterprise risk management practices.
Geneva Switzerland, 25 November 2020: Today, the World Business Council for Sustainable Development (WBCSD), in collaboration with Baker McKenzie are launching a short report on board directors’ duties and the consideration of environmental, social and governance (ESG) issues to help build stronger board decision-making.
The current health and financial crisis has accelerated the growing focus on both the purpose of the corporation and the role of the board in overseeing and leading the corporation in ways that promote sustainable business success.
The report, which draws primarily upon perspectives and insights from UK and US legal and regulatory structures, seeks to explain why sustainability matters and why it should be included on board agendas as a matter within their remit. It considers how boards should address sustainability in the context of their company’s strategic objectives and business model.
Beatriz Araujo, Partner at Baker McKenzie said ‘It is imperative that directors understand the nature of their fiduciary duties; in that context, good stakeholder governance is not only an imperative from a legal risk perspective, but also from a societal perspective. Shareholders, employees, customers and society have increasingly higher expectations of companies with regards to sustainable business practices – those boards that ignore this do so at the risk of losing their license to operate.”
Mario Abela, Director, Redefining Value at WBCSD said ‘The current COVID-19 crisis underscores the need for directors to exercise good stewardship to ensure their business model can be adapted and is resilient to fulfill a purpose beyond simply short-term profits. Good corporate governance is about good decision-making and understanding how directors’ duties and responsibilities should guide those decisions. Directors should approach ESG considerations in the same way as approaching other risks and opportunities with a view to generating long-term sustainable value.’
We challenge directors to assess whether they are taking all relevant steps in the boardroom to ensure the company not only properly assesses and mitigates sustainability risks but also understands the opportunities that sustainability considerations can bring to the company. Addressing sustainability is no longer a “nice to have”, it is a critical business issue that should be rolled into the broader corporate governance, risk management, disclosure and accountability frameworks of the company.
At the heart of good corporate governance is good decision-making, both in the boardroom and across the company.