Directors struggle on environment
More than half of directors of major companies fail to see a link between environmental, social and governance (ESG) issues and the bottom line, according to a survey of over 700 directors.
PwC’s survey Charting the course through a changing governance landscape reveals 45% of directors believe ESG impacts company performance, while 11% think environmental or sustainability expertise is very important for boards.
The survey shows they are confident in understanding traditional areas of ESG oversight, such as talent and culture, diversity and inclusion, data privacy and cybersecurity, with scores of around 90%. They are less so in emerging areas such as climate risk, with fewer than two thirds saying their boards understand their companies’ climate strategy, while only 56% understand their firm’s carbon emissions. Two thirds of female directors (66%) say reducing climate change impacts is a priority even if it impacts short-term performance, compared to 45% of males.
Smaller companies are behind their bigger counterparts; while 73% of directors at companies with US$10bn or more in revenue see ESG issues as linked to their strategies, this is just 40% at firms with under US$1bn, and 72% of boards at US$10bn-plus companies have discussed climate change, dropping to 27% at those with less than US$1bn.