Experience Stern | Faculty & Research

A critical enabler of good sustainability governance is an engaged and active board. Too often, board members do not have the experience to understand that sustainability is essential to effective business strategy and value creation. Other challenges include the lack of a formal board committee on the topic, a lack of expertise in financially material sustainability topics, and an exclusive focus on ESG compliance and reporting rather than business strategy.

In 2018, NYU Stern Center for Sustainable Business (CSB) analyzed the individual ESG-related credentials of 1,188 Fortune 100 board directors, based on regulatory filings and company bios with the assumption that credentials deemed important by the company would be included. At the time, we found less than one-third (29 percent) had relevant ESG expertise listed, with only 6 percent mentioning environmental credentials and 6 percent listing governance credentials. In a world where climate change is directly affecting many industries, only three board members had climate credentials.

Fortunately, our update to the research in 2023 found that 43 percent of board members had relevant ESG expertise and 89 of the Fortune 100 companies had ESG/sustainability committees, up from 22 in 2018. Board members with climate expertise increased from three individuals in 2018 to 22 in 2023 (still not a great showing) — however, some industries with significant climate risks had no board members with climate expertise.

Read the full Trellis article.
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Tensie Whelan is a Clinical Professor of Business and Society and Director of the Center for Sustainable Business.