The list of environmental, social, and governance (ESG) issues that can pose financial risks to corporations exploded in 2020: climate change, water scarcity, pollution, #metoo, #blacklivesmatter, worker welfare, employee diversity, corruption, human rights abuses, supply chain scandals, and the global pandemic COVID-19. Yet while many investors and chief executives now take ESG seriously in their decision-making, one powerful constituency is lagging: corporate boards.
Recent research — including studies conducted by NYU Stern CSB and former NYU Stern MBA students Jamie Friedland and Ellen Knuti at the NYU Stern School of Business — show that many boards have minimal ESG-related expertise and many do not even recognize the need to pay attention to material sustainability issues. CSB analyzed the individual credentials of the 1188 Fortune 100 board directors based on Bloomberg data and company biographies in 2018. Our findings show that 29% of directors had relevant ESG credentials. To read the full report, see which industries are most equipped for today's challenges and opportunities, and the way forward for corporate boards, click here. A shorter version of the report was also published in Harvard Business Review.