IT Governance

Are Corporate Governance and ESG Issues Related?

Companies have begun to acknowledge environmental, social, and governance (ESG) concerns impacting their businesses directly. Some business owners are experimenting to align their boards and firms with ESG. Earlier, ESG issues were considered a problem of the future, but it is not the case anymore. However, some directors are not aware of techniques to balance ESG concerns while keeping their organizational goals in mind. In her article for Effective Governance, Cate Jolley shares how corporate governance and ESG concerns are interrelated.

Understanding ESG and Corporate Governance

Business owners, senior leadership, and stakeholders should understand that ESG is no longer a potential risk factor. It is an immediate concern that companies should be prepared for. ASX Corporate Governance Council, for instance, has included several environmental risks such as global warming and water scarcity in the list of potential ESG problems. Corporate governance helps enterprises develop effective risk management operations that can mitigate ESG problems.

Linking ESG and Corporate Governance    

Jolley states that company boards and the management should assess ESG issues and respond with the support of organizational operations and strategies. Directors and senior officials should resolve ESG issues that their company might face. Besides, they should brainstorm ideas to collectively stop the risk of an environmental calamity at their end.

Employing Preventive Measures

In order to address ESG issues positively, your company should focus on allocating resources for ESG projects. You should execute those projects after conducting detailed research and implementing a thorough organizational strategy. Different environmental and social governance issues such as air quality, diversity, equity, and inclusion must be discussed openly in firms.

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