“Board members see both ESG risks and opportunities” from Willis Towers Watson shares insights from 12 board members representing 32 companies across 14 industries from a recent roundtable discussion on ESG, human capital, and risk.
Among the key challenges board members identified in addressing ESG risks and opportunities were:
- Measuring and quantifying risk, which is deemed key to being able to evaluate risks and trade-offs and determine where to invest or take mitigating actions.
- Determining whether and to what extent companies should invest in actions that are good for the environment or society, but lack economic payoffs for the company (i.e., for “goodwill” purposes)
- Notwithstanding the significant industry-specific and company-specific variations in risk profiles and ESG priorities, pressure from investors and regulators tends to be more “generic.”
- Supply chain information and management affects a company’s ESG performance but is challenging and potentially significantly risky.
More generally, the discussions revealed an understanding among directors that risks, challenges, and strategic opportunity are intertwined. Depending on the company’s business, certain risks can prompt practices and innovations that may provide the company with a competitive advantage.
See our recent report on the firm’s first-in-a series of board member roundtable discussions: “Climate Risk: Directors Weigh In”; Morrow Sodali’s “Evolving Trends in ESG Disclosure - Q&A with Maryann Waryjas”; and additional resources on our Sustainability page.
This post first appeared in the weekly Society Alert!