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How ESG attention is changing the role of the board

December 10, 2021, 10:43 AM UTC

Good morning.

Yesterday, Fortune and Diligent Corporation assembled a group of corporate directors to discuss how rising attention to environmental and social goals are changing the board’s role. There was unanimous agreement that pressure to perform against ESG (environmental-social-governance) goals is rising, and that the pressure is now coming from employees, customers and investors. Moreover, climate has become the top issue of concern.

“Every person who has spoken today has remarked upon the speed of this change. I don’t think there’s any reason to look forward and think that speed and focus is going to decrease. It’s going to be driven by customers, it’s going to be driven by employees, and…it’s going to be driven by the market, where people are going to want to put their money into companies that are focused on this.”
—Henry McGee, director, AmerisourceBergen

“A lot comes from the consumer. Lego announced recently that it was getting rid of its plastic bags holding the bricks and substituting paper. That came about because of letters from kids who were saying: ‘I know this isn’t good.’”
—Anne Sweeney, director, Netflix, Mayo Clinic, Lego Group

“What’s interesting is how this has evolved. A year ago, the number one topic, if you were to categorize shareholder proposals, was around diversity. This year…climate is now at the top of the list. We’ve flipped from social and diversity to climate.”
—Christa Quarles, CEO of Corel, director, Kimberly-Clark and Affirm

“Frankly, I think some of these carbon offsets are greenwashing. You know, buying offsets isn’t really carbon neutral. They’re just sort of paying guilt money. And if I were a board, I’d say let’s look at the real impact of our operations, not what we do with our guilt payments.”
—Seth Goldman, director, Beyond Meat

There is a lot of groping in the dark. I think there’s a lot of early thinking, there’s a lot of pledges. But I think across our client base, we would argue that there’s still a lot of people who are looking for more direction. Directors are looking to know what they should be doing to guide and push their companies in the right direction.”
—Brian Stafford, CEO, Diligent Corporation

And speaking of boards—a report from Pay Governance out yesterday shows U.S. boards have made huge progress achieving gender diversity in the last few years. A full 30% of directors at S&P 500 companies are now women, up from 18% just five years ago. In 2021, the advisory firm forecasts that while 1,400 men will be recruited to join boards, 1,800 men will depart. Among women, 1,200 will be recruited and only 460 will depart.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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