A Roadmap for Outlining ESG Risks & Opportunities
It’s impossible for corporate boards to go about their business these days without some discussion of ESG. Environmental, social and governance issues (ESG) are among the top priorities for today’s institutional investors. Boards are often challenged by the breadth of ESG, as it can seem all-encompassing; yet, sometimes the greatest challenge is just knowing where to start.
In this episode, John Truzzolino, Director of Business Solutions at Donnelley Financial Solutions (DFIN), shares key takeaways from a recent white paper: ESG Risks and Opportunities: Understanding the ESG Landscape. In this report, DFIN outlines a roadmap for structuring board oversight of ESG: How can boards determine which ESG issues are most important to their company? Who should be involved? And, how should boards approach ESG measurement and reporting?
We did a survey of investors, and we found that the information they were getting from companies [was not] decision-useful information. They needed transparency, context, and links to business strategy.
— John Truzzolino, Director of Business Solutions at DFIN Solutions
Truzzolino highlights “four steps to beginning your ESG journey,” which are detailed in the report. He also emphasizes the relationship between ESG and the board’s enterprise risk management (ERM) process. Truzzolino explained that the COSO framework, a widely used ERM framework, recently layered ESG considerations onto their existing methodology; this new framework addition is training boards to think differently about intangible assets such as human capital, environmental issues and social concerns.
“Risks and opportunities are two sides of the same coin,” said Truzzolino. “As a board member, you want to identify those items that have the ability to drive the strategy of your company.”