August 12, 2022

ESG: How Should Boards Provide Oversight?

While we’re on the topic of Caremark and board oversight, be sure to check out this Bass Berry blog addressing the matters that should be considered when deciding how to provide board oversight of ESG initiatives and disclosures.  The blog notes that approaches vary, and that many boards opt to have the full board provide that oversight.  However, this excerpt says that there is a trend toward delegation:

For example, according to an EY study of Fortune 100 companies in 2021, 85% of the surveyed companies disclosed that a committee of the board oversaw environmental sustainability or corporate responsibility matters, compared to 78% in 2020. While these figures are likely higher among Fortune 100 companies than public companies as a whole, this increase between 2020 and 2021 reflects a trend toward greater board committee oversight of ESG matters occurring more generally among U.S. public companies.

Factors contributing to this trend include the SEC’s requirement for extensive board oversight under its proposed climate change disclosure rules, the increasing amount of time that boards are being required to devote to ESG issues, and the need in some cases for specialized expertise.

John Jenkins