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ESG and the Board of Directors

Updated: Jun 23

An Imperative, But…



The emergence of ESG, or Environmental, Social, and Governance, as a “front and center” issue has developed over the last several years. The interesting point is that while each of these topics is quite different in substance, they share the spotlight having emerged to such a visible state at the same time. This resulted from a confluence of many factors including the following:

  • The 2019 statement by the Business Roundtable embracing a broader definition of corporate purpose to include “stakeholders” which is inclusive of shareholders but does not recognize the traditional primacy of shareholders as a constituency.

  • The emergence of the large institutional investors as a clear voice in communicating priorities for investee companies. The "annual letters" from the CEOs of BlackRock, Vanguard, State Street, and others, set forth their views on which priorities should receive attention and action. For public companies, these fund families are often their largest shareholders.

  • While not a new topic, the importance of diversity, equity, and inclusion has taken on a new meaning in the wake of the death of George Floyd and other highly visible incidents involving racial injustice. The ensuing public demonstrations turned violent in many cities leading to injuries and property damage. DEI is not a new topic, but these events had a meaningful impression on raising the issue to a new level of importance.

  • Climate change has exploded as a higher priority for discussion and action by companies. The impetus for this heightened importance as an urgent topic is an amalgam of: 1) data showing continued impacts of global warming; 2) global summits on the topic among nations to garner agreement on limiting emissions and greenhouse gasses; 3) the emergence of “carbon neutral” as a corporate goal; and 4) the work of the Sustainability Accounting Standards Board and most recently the founding of the International Sustainability Standards Board. Couple all of this with a younger corporate workforce very aware of the importance of the climate issues to their future.

The challenge before us is to foster these diverse elements into cogent expectations on the role of business broadly, that of the board of directors more specifically. Our goal: having put ESG in context, to explore each of the three elements in a series of notes to bridge the gap existing today between an important imperative and the desired result—initiatives that drive change.



Sage Partners Thomas L. Doorley, III and Robert J. Kueppers contributed this Sage Advice

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