The Canadian Coalition for Good Governance, an organization consisting of institutional investors, has released a guide for company boards seeking to oversee environmental and social issues within their investments.
The guidebook offers 29 recommendations covering eight key governance areas, aiming to help boards effectively oversee company disclosure of environmental and social matters. “Companies and investors around the world are realizing that there must be a greater focus on [environmental and social issues] management as a critical driver of long-term shareholder value,” said Stephen Erlichman, executive director of the coalition, in a press release.
Read: Japan a hotbed of ESG activity
With the increasing prominence of issues like climate change, extreme weather and employee health and safety, companies are facing increasing pressure to provide transparent evidence demonstrating they’re capable of managing key environmental and social factors, according to the coalition. At the same time, investors are seeing further encouragement to consider such factors in their decision-making processes.
As such, the coalition formed a committee in 2016 to formulate high-level guidelines for company boards in these areas, resulting in the 29 recommendations. “The oversight of all significant risk factors is a core function of a corporate board,” said Barbara Zvan, chief risk and strategy officer of the Ontario Teachers’ Pension Plan and chair of the coalition’s environmental and social committee.
“Every company should have a robust risk management system that includes [environmental and social] factors as a fully integrated part of the identification and assessment process. We encourage all company boards to use this guidebook for practical insights on how they can enhance their frameworks.”
Read: Is gun control the next big ESG issue for institutional investors?