Building ESG competences in Boards
What is the project about?
Environmental, social, and governance (ESG) indicators are widely recognized as having significant financial implications, leading to market downturns for companies that are unable to effectively address them. Asset owners, asset managers, commercial banks, and insurance companies have all embraced ESG metrics, yet corporate boards remain inconsistently educated about these important risks. Recent research conducted by NYU Stern School of Business and the Copenhagen Business School has shown that many boards lack the expertise necessary to address critical ESG issues.
Given the growing importance of sustainability challenges and their impact on regulatory and stakeholder expectations, investors and stakeholders are seeking ways to measure and understand boards' sustainability competence. To address this need, the Copenhagen Business School, Matter, and the Copenhagen Board Education (CEF) are collaborating to develop a cutting-edge ESG Board alignment methodology and tool to assess Danish company boards.
The purposes and goals behind building an ESG Board Readiness tool is to collect new forms of Big Data that can evaluate sustainability competencies at the Executive Governance level. With increased demands placed on companies to both meet their sustainability challenges and work to contribute to a more sustainable planet, the role of the Executive committee to ensure such commitments is critical. Company boards who are unable to both manage, let-alone, comprehend the scope and scale of their sustainability commitments will risk reputational and financial risk.
The purpose of our work is not to challenge whether a board should be diverse. Instead, we need to study and develop tools that can assess which degree of diversity contributes to more performative boards. In addition, our data challenges the Danish norm of assessing board diversity as just gender. Instead, we believe that diversity is far more nuanced and must explore education, past experience, service to community, political power, life-long Learning and internationalisation - to name a few.
Copenhagen Business School
Kristjan Jespersen, Associate professor, Department of Management, Society and Communication
Matter and Implement