The study examines U.S. corporate board members' lack of environmental, social, and governance (ESG) expertise needed to face the risks from climate change, and offers several remedies. For example, the health care, financials, and insurance sectors have material “E” risk (such as climate change). However, only 11 members of 149 in the sector study group had “E” credentials.
As asset owners, asset managers and many CEOs are now considering ESG issues essential for financial performance, companies can ensure they are equipped with the necessary expertise by:
- Recruiting directors with ESG experience
- Requiring the board to idenitfy material ESG issues
- Requiring executives to report the financial impact of ESG investments using tools like CSB's Return on Sustainable Investment (ROSI) Methodology, which allows companies to measure intangible metrics including risk avoidance, employee retention, and operational efficiency
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