Corporate board members are getting the message loud and clear: That ESG can’t be ignored. However, there’s very little tactical guidance on what they should actually do about it

• Your management team: Start by identifying the management players with responsibilities, powers and expertise on company-specific ESG matters. Since ESG covers so much turf, you’ll want broad input. The CXOs – finance, HR, legal, investor relations, and compliance or disclosure staff – all have a piece of ESG. If you’re a smaller or closely-held company, you likely won’t have all these titles, but you’ll still need their expertise. An ESG shape-up can be a good motivator for venture or private companies to formalise how these tasks (which you now manage informally) should be allotted. Designating a “management” ESG committee not only makes results more likely, it tells your stakeholders that ESG is taken seriously.

• The board talent: We have always advocated for the use of a board “skills matrix” to assess the talents a board currently has, what it lacks, and how succession planning and training can fill gaps. Now, add ESG background and credentials to your matrix. Every board doesn’t need a climate scientist, an environmental lawyer, or a rep from a human-rights organisation. Start by digging into the environmental and social skills your current directors have tucked away in their vitae. How can you tap this experience to shape ESG oversight and credibility? What gaps can you identify on the board in managing company ESG challenges? Also, look into the backgrounds of current and potential board members for ESG negatives. You don’t want shareholders or activists to be the first to notice a director previously served on the board of a company with a major environmental disaster.

• The board structure: How the board shapes itself to oversee ESG brings its own challenges. ESG should be integrated into the agenda of the full board, but this can push towards an ineffective check-box approach. Directors get a brief report that all is well on ESG (with lots of numbers and charts), and then moves on. Start by looking at the bylaws and agendas of current committees and asking how they can take on specific pieces of the ESG spectrum. The audit committee incorporates ESG materiality measures, risk, and disclosures. Compensation should factor ESG goals into pay measures and incentives, top exec/median employee pay balances, and stakeholder comp concerns. The nominating/governance committee can serve as the board’s overall ESG wrangler, and also factor board skills into its work, board ESG education, and stakeholder communication

ESG is still a new language in most boardrooms. But it’s fast becoming a language your board must learn. Our board ESG toolkit programme is designed to equip the boards of tomorrow with the right ESG processes.