The G in ESG – Governance – What is expected by an effective board?

Susanna Lecander Messelt
effective board sustainability messelt ESG

Picture by nickgesell on Pixabay

According to ICGN global governance principles, the board of directors (BOD), or the board, have the following topics that they should be on top of:

  1. Responsibilities (soon)
  2. Leadership and independence (soon)
  3. Composition and nomination (soon)
  4. Corporate culture (soon)
  5. Risk oversight (soon)
  6. Remuneration (soon)
  7. Reporting and audit (soon)
  8. Annual General Meeting (AGM) (soon)
  9. Shareholder rights (soon)

For all of these elements we expect the board to satisfy a certain number of criterias.

Of course, the size and the stage of development of a company will have an impact on how hard we are on these requirements. The requirements we demand from a Nordic large cap with global activities is not the same as we demand from a small recent local activity company with say 30 employees. Although is should be said that the requirements are sound practice and also small companies should strive to satisfy these as soon as possible. I recommend that if a small company does not have this in place, that they at least show they understand the interest og getting this in place as soon as possible and even better, that they can explain the path they intend to follow to get there.

To dig into the details of the requirements for the board, follow the links in the 9 topics mentioned above.

There are also a certain number of elements that can compromise the effectiveness of the board and it tends come from the human character. But there are ways this can be addressed, read more about it here.