IT Governance

How Crucial Is ESG for Corporate Governance?

Global investors now assess enterprises on their compliance, social, and environmental performance instead of annual turnover. As a result, stakeholders have expressed substantial interest in products falling under the environmental, social, and governance (ESG) criteria. In this article at Forbes, Michael Spellacy suggests that the corporate board navigate common business challenges to overcome ESG issues.

Business Transformation

A majority of governance practices must overcome the basic business transformation. However, the top financial goal for entrepreneurs at present is to fix revenue gaps. The global pandemic caused a lack of employee engagement and diversity, and limited business transactions, due to which profits are dipping.

Back to Basics

Corporate boards should apply the fundamental governance practices of overseeing stakeholders interests in the business operations. Consequent to the digital acceleration trend, the board must also prove its commitment to emerging technologies. Implementation of artificial intelligence, cloud computing, and blockchain can change the future of business. Therefore, shareholders should perceive board meetings as an opportunity to anticipate the future.

ESG Initiatives

By pitching projects around environmental, social, and governance issues, the board can prove their commitment for stakeholders’ requirements. According to a recent report by the U.S. Government Accountability Office, institutional investors evaluate the scope of ESG before investing in an organization. They are proactively funding organizations that are contributing to ESG projects. Decisive actions to decrease environmental risks and increase returns on medium to long-term investments are on top of today’s stakeholders’ agenda.

The fact that investors are exploring ESG is proof that standardization of data is a considerable challenge. So, the board must put these three letters on top of their corporate governance itinerary.

Click on the following link to read the original article:

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