ESG Governance in a Company

Oct 26, 2023

Supervisory board oversight, committees

Supervisory board or Management board should provide oversight and leadership in ESG matters. This includes understanding the strategic importance of ESG issues, setting ESG goals and priorities, and holding management accountable for ESG performance. Consider establishing dedicated board committees, such as an ESG committee or a sustainability committee, to focus on ESG issues and provide oversight. 

Senior leadership engagement

The senior management team should be actively engaged in ESG initiatives, responsible for setting the ESG strategy, and held accountable for achieving ESG goals including setting up related incentive systems. 

Hiring a dedicated specialist or a team

This person or people are hands-on with the planning and execution of different ESG initiatives and oversee the development of the area as well as related reporting to the stakeholders. 

Integration into strategy

Integrate ESG considerations into the company's overall strategic planning. Ensure that ESG goals and performance indicators are aligned with the company's long-term objectives.

Risk management

Assess and manage ESG-related risks. Understand the potential financial, operational, and reputational risks associated with environmental, social, and governance issues.

Stakeholder engagement

Engage with a broad range of stakeholders, including employees, customers, investors, and the community, to understand their ESG expectations and concerns. This can inform ESG strategy and reporting.

Policy development

Develop clear ESG policies that outline the company's commitment, values, and principles regarding environmental, social, and governance issues. These policies should guide decision-making and behavior throughout the organization.

Metrics and reporting 

Establish robust ESG reporting mechanisms to track and report ESG performance, using relevant frameworks and standards (e.g., GRI, SASB, TCFD). Regularly communicate ESG performance to stakeholders in a transparent and consistent manner.

Incentives and compensation

Link executive and employee compensation to ESG performance. Create financial and non-financial incentives that encourage responsible and sustainable business practices.

Training and awareness

Ensure that employees at all levels of the organization are educated and aware of ESG issues. Training can help build a culture of responsibility and sustainability.

Supplier and partner engagement

Work with suppliers and partners to encourage ESG best practices throughout the supply chain. Consider ESG criteria in procurement decisions.

Compliance and legal considerations: 

Stay informed about relevant laws and regulations related to ESG issues. Ensure that the company is in compliance with these requirements.