Boardroom attention to ESG issues is urgent because only “lip service” has been paid to the topic so far, according to an ESG and business expert.

Anna Daroy, a former chief executive of the Institute of Directors and a non-executive director, made the remarks during a webinar on ESG risk hosted by Board Agenda and Diligent.

“The urgency is because we’ve paid lip service to ESG for so long and now we’ve got to see action,” she added, during a discussion that ranged over ESG, responsibilities and the role of boards.

Daroy said pressure is mounting from many quarters to “take care of the planet”, and confronting the need for corporates to address ESG is key to meeting Net Zero 2030 targets.

“Where the urgency lies is in making the whole discussion a lot more pragmatic about how this can be integrated onto corporates, every value, everyday practices and operations and the whole value chain,” she said.

ESG, investors and a new generation

According to Lisa Edwards, chief operating officer at Diligent and a panel member, pressure to act is coming from regulators but also from other parties—including investors.

“Whether you want them in your stock, because you’re a publicly traded company, or you want access to debt, the trillions and trillions and trillions of dollars associated with ESG-related funds and investors mean you have to get your act together on ESG.”

Rosalind Kainyah, another panel member and managing director of Kina Advisory, a sustainability adviser to companies working in Africa, said pressure to embrace ESG also emanates from a “younger generation becoming insistent on who they work with and who they buy from”. They are a “a lot more purposeful,” she added.

Kainyah argued that ESG should be a full board responsibility, not the task of siloed departments. She gave an example of a board on which she serves where there is a specialist ESG committee but all board members serve. This allows a “fully-fledged deep dive on ESG matters for the company”.

On another board she noted a dedicated ESG workshop involved contributions from the CEO and CFO just as much as any other board members.

Lisa Edwards said Diligent research recently found that around 43% of boards deal with ESG at full board level. “That makes perfect sense when you start to think about how complex and how broad ESG is,” she said. The pandemic also caused more boards to intensify their focus on ESG. A total of 71% of those polled in the Diligent survey said they were incorporating ESG into the goals and metrics of their company strategies.

Daroy warned that while boards were dealing with ESG strategy, they had to ensure policy decisions were actually delivered. “This is fundamental to get it into organisations: The board needs to have assurance from the executive team that what has been set as ESG strategy… is being fully implemented effectively and fully integrated right down to the [company] values.”

Watch the full Diligent and Board Agenda ESG Risk webinar.