Organisations must identify the risks and opportunities that relate to environmental, social and governance considerations, directors urged
The Institute of Directors has published a policy paper, ‘ESG Priorities for UK Companies 2022’, which sets out a number of ESG priorities for UK companies and organisations.
Environmental, social and governance considerations are increasingly important decision-making criteria for all types of organisations – not only as a means of winning the trust of stakeholders but also as barometers of effective business management.
The IoD provides a checklist of ESG priorities which are worthy of boardroom discussion in 2022, organised across the following key themes:
- Stakeholders and business purpose
- Inclusion and Diversity
- Executive remuneration
The report’s author and IoD Director of Policy and Corporate Governance, Dr Roger Barker, said: “A strong ESG profile is attractive to potential investors, lenders, employees and customers, and helps build the brand of the organisation.
“Conversely, weak ESG performance is a red flag. It could indicate that the company’s leadership is not well aligned with the interests of wider society – bringing its longer-term sustainability into question.
“Although a focus on ESG is emerging as a mainstream business priority, there remains a body of opinion which argues that it comes ‘at the expense of focusing on the fundamentals of the business’.
“Such an attitude is increasingly at odds with the demands of younger customers and employees – who expect companies to stand for something with a positive social impact.”