Multiple ESG committees: yes or no?

Multiple ESG committees mean different things to different people. To some, the idea is a necessity; to others, it’s redundant. And then there’s a large group of people who feel simply feel outpaced by it: “We just adapted our company strategy for ESG; now we need multiple committees for it?” So, are multiple ESG committees crucial for organisations that take the concept seriously, or can you get away with just one? Let’s explore: What does an ESG committee do? An ESG committee develops a company’s ESG policy and oversees its implementation. Remember: ESG committees don’t need to go by that name. Other committees, such as the nominating/governance or audit committees, could take the ESG portfolio. On the surface, developing an ESG policy can seem manageable. But if you’re familiar with the concept, you know how quickly the details can pile up. Unmanaged by untrained minds, ESG can easily overwhelm. It’s an ocean of data based on three gigantic pillars of principles, overseen by many stakeholders and disclosed through reporting frameworks that have yet to see global standardisation. Think that’s a mouthful? You may begin to see the argument that one committee simply isn’t enough. Are multiple ESG committees popular? Yes, and their popularity is rising among the world’s top companies. A recent proxy research survey from Deloitte analysing S&P 500 companies revealed that 51% of respondents no longer used a single body to feed ESG disclosures. Among these 51%: Some companies share the responsibility between a specific committee and the board of directors. Other companies split the responsibility between multiple committees. Most of these committees already exist and incorporate an aspect of ESG into their portfolios. Either way, these organisations have abandoned the idea that a single group should take responsibility for their entire ESG strategy. How are ESG responsibilities split when multiple committees are involved? This is subjective, and for a good reason, too. No two companies’ ESG responsibilities are the same. Therefore, it stands to reason that they split jobs differently. In general, though, jobs are split according to simple common sense. For example, audit committees take on business conduct and governance ethics. Finance and risk committees handle corporate risk in all three ESG. Remuneration committees deal with monetary matters regarding senior leadership and whether bonuses should be tied to, for example, the company’s carbon footprint. Sometimes, companies create entirely new committees to focus on some or all ESG pillars. Are multiple ESG committees a good thing? They’re certainly seeing an increase in popularity, but whether they’re good depends on your business. There’s one word you should keep in mind: maturity. As a corporate leader, you should approach the question of multiple committees the way you might have approached the question of a single committee, asking yourself: Where does my company sit on its ESG journey? Does it need multiple committees to assist on this journey? Can we realistically provide multiple committees? Remember If a company decides to pursue ESG, its principles must form a core part of its strategy. That relationship works both ways: the strategy needs to be able to incorporate ESG principles too. If multiple committees help this relationship, then they might be worth exploring. If it makes things unmanageable, a re-think might be in order first. Ultimately, though, “multiple ESG committees” is an adaptable phrase. It can mean splitting responsibilities across current committees, new ones, including the board, or a combination. As long as you know your business needs and goals, you’ll know whether multiple committees are part of that.

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