Effective board habits and strategies to improve ESG governance

Amidst heightened scrutiny over greenwashing, businesses are reevaluating their governance frameworks to enhance environmental, social, and governance (ESG). This requires a nuanced approach that aligns an organization’s risks, strategies, reporting, communication, and continuous improvement work.

Steps to improve ESG governance

Effective boards maintain a clear focus on strategic ESG objectives, fostering good governance, and promoting a culture of transparency and accountability. This is characterized by informed decision-making, enhanced ability to manage risks, and improved communication among board members and with stakeholders.

Increased effectiveness supports success of the organization’s ESG work, helping it to navigate challenges and capitalize on opportunities. Boards can take the following steps to help improve ESG governance.

• Understand risks
• Integrate strategies
• Understand reporting practices
• Reinforce communication standards
• Continue improvement

Understand risks

The tenets of ESG practices have provided organizations with a comprehensive framework for understanding their risk environment. Board members should develop a deep understanding of which ESG issues are most relevant to their organization's industry and operations.

Board members can help create a better risk approach by identifying and assessing ESG-related risks that could impact the organization's long-term performance. They can also work with the management team to develop strategies for mitigating these risks and incorporate them into the overall risk management framework.

Integrate strategy

Proactively aligning ESG principles with an organization’s strategic plan can strengthen regulatory compliance and demonstrate a commitment to responsible governance. An integrated ESG and operational strategy fosters resilience, innovation, and sustainable growth.

The following steps can be taken to further integrate your ESG strategy.