A recent survey by PwC disclosed an apparent vacuum in the comprehension of ESG risks within numerous corporate boardrooms.
According to ESG Today, it was found that less than a third (31%) of the board members avowed a sturdy understanding of ESG risks pivotal to their companies. This surfaces amidst a climate where ESG parameters have increasingly been dictating global investment directions and consumer expectations.
Gleaning insights from over 600 directors across 12+ industries, primarily from companies boasting revenues exceeding $1bn, the survey unmasked a sombre tableau: despite 52% asserting that ESG issues regularly permeate their boards’ agendas, and 54% linking ESG issues to their company strategies, a remarkable majority confessed to a deficit in comprehension of crucial sustainability-associated matters.
One key find highlighted that, whilst board directors manifested a more assured understanding of ESG-related matters like ‘talent and corporate culture’ (52%) and ‘data privacy/cybersecurity’ (45%), a mere 26% demonstrated a sturdy grasp of carbon emissions and an even lower 20% for climate risk and strategy. Although issues like talent management and data security witnessed over 90% boardroom attention over the past year, pivotal sustainability-related topics like climate change and environmental remediation lingered in the shadows, with only 49% and 43% discussions respectively.
Particularly interesting is the gender differential in ESG perception. Female directors showcased a more entrenched belief in the financial impact of ESG issues on company performance (61%) and its tethering to company strategy (67%), starkly contrasting with their male counterparts at 35% and 51%, respectively.
The survey also underpinned an encouraging trend in ESG-related reporting preparedness, with 51% boards feeling sufficiently primed to supervise mandatory ESG disclosures, a figure that has more than doubled from last year’s 25%. Additionally, a progressive 44% of respondents favoured executive compensation being yoked to diversity, equity, and inclusion metrics, and 31% to environmental objectives, starkly undercutting the mere 7% who believed that remuneration should be tied solely to financial performance.
This substantial survey stirs imperative deliberation on the necessity for a broader and deeper integration of ESG comprehension within the boardroom, especially in light of the evolving global FinTech and business landscape.
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