Pandemic and climate risks are the top topics of discussion in leadership conferences across the world. Influential companies might need to include environmental, social, and governance (ESG) factors for a stable stakeholder governance framework. Meanwhile, the US Business Roundtable recently changed its corporate purpose statement to promote “an Economy that serves all Americans”. In this article at Forbes, Adam Robbins and his co-authors discuss how ESG tools can be part of stakeholder governance and address sustainability.
ESG Tools for Global Issues
Investors like Blackrock, State Street, and Vanguard have joined the race for a sustainable future. So, stakeholder capitalism is receiving more attention wherein diverse opinions get a voice. But first, you must address two issues:
- Continuously mapping and measuring stakeholder best practices
- Inclusion of stakeholder governance in corporate strategies
Stakeholder Governance and ESG
A Forum report shares realistic guidance on how chairpersons, board members, and executives can create an efficient stakeholder governance framework. The previous report stated that several companies are already following stakeholder capitalism metrics. The governance structure may be different from company to company. However, it must have recommendations related to ‘purpose, strategy, culture and values, fiduciary duties, board composition and effectiveness, stakeholder engagement, engagement with shareholders/investors, incentives, ESG KPIs and transparency and reporting’.
For a successful stakeholder governance process, the board committee must proactively know what interests the stakeholders and accordingly prepare their resources and reports. These proactive efforts make for a successful governance journey. Some companies also consider gender equality, skill diversity, ethnicity, demographics, etc. These facilitate transparent processes and KPIs.
Additionally, when you include ESG into the stakeholder governance framework, it broadens the inclusion vector. From board members and management to workers and suppliers, all get to have a say in the business. As a result, many organizations are taking part in environmental issues, carbon footprints, and science-related dialogs.
To view the original article in full, visit the following link: https://www.forbes.com/sites/worldeconomicforum/2021/01/13/how-corporate-leaders-can-apply-esg-tools-to-help-overcome-global-challenges/?sh=165bfea15de1