Key Findings

Customers, employees, shareholders, and other stakeholders, are increasingly expecting companies to tackle environmental, social, and governance (ESG) issues. That includes the American public. In our 2021 survey of the People’s Priorities, “The board of directors holds executives accountable to the interests of its workers, customers, communities, and the environment, as well as shareholders,” emerged as the third-most important Issue to the public, representing over 10% of our Rankings model.

And, as pressure has increased, so have corporate disclosures showing board oversight of ESG efforts. Our analysis of three data points on board oversight of ESG issues, covered under the Shareholders and Governance stakeholder, has led to two key findings. First, disclosure on these data points is steadily increasing. Almost a fifth of companies in the Russell 1000 Index report all three ESG governance data points we measure in 2022—up from around a tenth in 2020. Second, the Oil & Gas, Utilities, Energy Equipment & Services, and Chemicals industries have a much larger percentage of companies disclosing on all three ESG governance data points than other industries.

Board Oversight of ESG from 2020-2022: Unpacking the Rise in Disclosure

As proxy season kicked off last month, Mastercard made headlines with a decision to link ESG goals with bonus calculations for employees at all levels. The company had previously tied these metrics to compensation for senior-level executives, incentivizing leaders to be accountable to all their stakeholders and not merely shareholders. And while this remains a growing trend as median CEO pay sees another record-setting year, this latest move marks a deeper degree of incorporating ESG into how the company operates. Mastercard’s shift also comes as corporate America faces challenges from investors over policies and practices related to climate change, racial equity, political contributions, and other ESG issues.

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