Olivier Jan is Sustainability Leader at Deloitte Global. This post is based on his Deloitte memorandum. Related research from the Program on Corporate Governance includes Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here).
Discussions of environmental, social, and governance (ESG) matters have taken hold in mainstream media, government bodies, coffee shops, the food industry, clothing manufacturers, and boardrooms. With such high stakes, this is an area that organizations, and their boards, cannot afford to get wrong.
As overseers of risk and stewards of long-term enterprise value, board members have a vital oversight role in assessing the organization’s environmental and social impacts. They are also responsible for understanding the potential impact and related risks of ESG issues on the organization’s operating model. In light of these factors and stakeholder concerns, organizations are reimagining and enhancing their ESG positions. This is happening more in some regions (e.g., Europe) than in others, and it is more prevalent in certain sectors (e.g., consumer products, heavy industry). Shifting political winds also can affect these efforts. Since ESG issues began to move into the mainstream, the trend has generally been for organizations to pursue sustainable practices for the long term.
