Clarity of purpose
Oversight of ESG risks and opportunities is a significant challenge, involving the full board and potentially multiple board committees. For example, elements of climate and diversity, equality and inclusion (DEI) oversight likely reside with the audit and other committees – as well as the ESG committee. Consideration needs to be given to the coordination between committees as well as the information flows to the committees from the corporate functions (risk, operations, legal, etc.) and from the committees to the board itself.
For example, climate change might initially appear to reside with an ESG committee, but it will also likely touch the audit committee (data, the systems that produce that data, and corporate reporting), the remuneration committee (management incentives), and the nomination committee (the skills and experience of board members and senior management).
Overlap is to be expected, but this puts a premium on information sharing, communication, and coordination between the committees. It also requires that committees have the expertise to oversee the issues delegated to them.
