ESG on board agenda but difficult for directors to approach, says Gartner

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Gartner’s recent board of director’s survey reveals that directors are increasing their risk appetite moving into 2022, with ESG jumping in the priority list. 

According to Brian Ferreira, managing executive partner at Gartner, “I see boards have accepted that responsibility, they have accepted that they need to move on [ESG]. They've got it on the agenda, but they actually, in some cases, are struggling to find the right approach [and] the right balance.”

Ferreira says that while ESG is on the board agenda, it is often hard for boards to approach it due to inherent complexities. He encourages boards to lean into the conversation to better understand their responsibility and determine their course of action.

“It's that getting away from the short-term profits, getting away from all the short-term thinking, it's even going about how to reengage shareholders, and helping shareholders understand that they've got a future responsibility, as well as not just for, you know, a quick buck to be made in their super fund or quick personal money. It is quite a complex stakeholder conversation.”

While there is a social pressure on boards and businesses to consider ESG, there is also a pressure on governments to move forward on these issues, he says.

“Stand firm, bring an opinion to the table, have your real views about that opinion, and then drive an agenda.”

Ferreira says that quicker risk management brings complications for boards who are used to making decisions based on stable conditions.

“The risk appetite is about allowing the business closer to the board to give much sharper and shorter context about today, and then be able to pivot to what that looks like for today and constantly re-evaluate. So that's the risk cycle and the speed of change that's causing this constant risk appetite and change for boards,” says Ferreira.

He believes that boards have come a long way when it comes to digital business acceleration, with many now viewing technology as a business investment and a driver of decision making.

"Investment in technology is no longer a back office investment cycle. It's a business investment as such. And the way that technology and digital is now being governed has been seen as an enterprise assets in that space. So that's the big shift that boards have made towards managing technology, making decisions and spending money."

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