Social investing and sustainability-as-strategy are more widespread than they have ever been. As such, many corporate boards are giving increased attention to sustainability’s role in M&A, capital allocation, and capital raising. CSB Director Tensie Whelan spoke with Deloitte US Sustainability and Climate Change leader Scott Corwin and Center for Integrated Research senior manager Derek Pankratz in a recent Deloitte publication about how boards can prioritize ESG frameworks and metrics in financial decision making. A version of the article was also published in The Wall Street Journal. 

Corporate sustainability today is light years ahead of where it stood 10 to 15 years ago, according to Professor Whelan. Companies are recognizing that sustainability is vital to financial performance and competitive advantage, and investors and regulatory bodies are starting to pay more attention to ESG metrics. There is, however, much more ground to cover. 

According to Professor Whelan, ESG is likely relevant in all board committees from risk and governance to compensation. She adds, though, that ESG should be a separate committee in boards for most industries because of its unique position in risk and opportunity. Part of the challenge is being forward-looking in understanding the benefits of prioritizing sustainability and a sort of language barrier that can sometimes exist between sustainability and finance professionals. Pushing for all parties to adopt a long-term perspective is key, according to Professor Whelan.

Excerpt: “The board needs to understand what those risks and opportunities are and how the executive team is implementing against them in a rapid, transformational way. This is changing so fast that the board needs to be looking at trends and targets quarterly to make sure that the pace of change in the organization is commensurate with what is happening externally.”