# Boards Are Obstructing ESG — at Their Own Peril

1 Opinion January 18, 2021 Harvard Business Review ![Tensie Whelan](/sites/default/files/styles/246w/public/assets/images/Whelan%20Article.jpg?itok=XEKEqv-d) By Tensie Whelan >

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…not to mention 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 us and former MBA students Jamie Friedland and Ellen Knuti at the NYU Stern School of Business — show that many boards have little ESG-related expertise and many do not even recognize the need to pay attention to material sustainability issues.

For instance, PWC’s 2020 Annual Corporate Directors Survey found that only 38% of board members think ESG issues have a financial impact on a company. This despite the fact that institutional investors such as BlackRock and State Street Global Advisors — as well as major asset owners such as the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) — are increasingly focused on ESG performance. Corporate chief executives have joined the chorus, too: The Business Roundtable’s August 2019 pronouncement of corporate purpose was a broad and powerful embrace of positive ESG behavior that requires board action to execute.

Read the full [*Harvard Business Review* article](https://hbr.org/2021/01/boards-are-obstructing-esg-at-their-own-peril).
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*Tensie Whelan is a Clinical Professor of Business and Society and Director of the Center for Sustainable Business.* ## More from Tensie Whelan

- [Demystifying the ‘Say-Do’ Gap in Sustainable Product Purchases.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/opinion/demystifying-say-do-gap-sustainable-product-purchases)
- [How LPs Can Better Assess Sustainability-Linked Value Creation.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/opinion/how-lps-can-better-assess-sustainability-linked-value-creation)
- [Lessons From a Decade of Teaching Sustainability at B-School.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/lessons-decade-teaching-sustainability-b-school)
- [ESG Reporting Needs a Refresh. Here’s How to Fix It.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/esg-reporting-needs-refresh-heres-how-fix-it)
- [The B2B Opportunity in Corporate Sustainability.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/b2b-opportunity-corporate-sustainability)