Society for Corporate Governance and Thompson Hine Review Board, Management Roles and Responsibilities Related to ESG Governance
Date: October 05, 2021
Publication: Thompson Hine LLP
Detailed new publication offers corporate leaders valuable benchmarking data and examples of how they might design their own governance structures and disclosures, continues momentum of and expands upon recent Thompson Hine survey-based report
CLEVELAND – October 5, 2021 – Thompson Hine LLP and the Society for Corporate Governance released a jointly authored publication, “ESG Governance: Board and Management Roles & Responsibilities,” which aims to provide guidance to boards of directors and management on their oversight and implementation, respectively, of ESG issues and strategy.
“Given the many ESG reporting frameworks and standards, widely differing stakeholder priorities, and lack of consensus as to what is encompassed within ‘ESG,’ today’s corporate leaders face a daunting task with respect to ESG governance issues,” said co-author Jurgita Ashley, Thompson Hine partner and current president of the Ohio Chapter of the Society for Corporate Governance. “And yet, boards and management do not have the luxury of waiting. With this publication, which follows a recent survey-based ESG report from Thompson Hine, we hope to provide directors and management with additional resources to help them shape their own oversight and management activities.”
ESG oversight responsibilities, the publication suggests, may reside with the full board, an existing board committee, or a newly formed, dedicated ESG committee. They can also be shared by the full board and one or more committees or by multiple committees covering ESG issues that fall within their charter mandates and areas of expertise. Stressing that companies need to consider their own specific facts and circumstances, the publication offers illustrative examples of potential oversight allocations—and recommends updates to company policies, corporate governance guidelines, and/or committee charters to reflect allocations of duties and responsibilities.
The authors discuss considerations relevant to management’s reporting to the board, including director competencies, determining which ESG topics and metrics to share with the board, and the frequency of reporting.
Examining management organization relating to ESG governance, the publication reports that day-to-day implementation of the ESG strategy usually rests with senior management, but that companies are employing widely varying approaches to creating and staffing their ESG teams, delineating internal reporting lines, and establishing formal procedures.
Finally, the report addresses (and provides samples of) ESG disclosures, finding that—whether published on company websites or included in sustainability reports, proxy statements, or other reports or filings—such disclosures often describe the allocation of oversight responsibilities for various ESG issues between the board and its committees, the reasons for such allocation, and if/how the oversight is documented in committee charters, governance guidelines, or company policies. Other details addressed by companies in ESG disclosures may include:
- key ESG issues, including risks, mitigation strategies, and business opportunities
- how board oversight aligns with the company’s long-term business strategy;
- processes that demonstrate the board’s agility to adapt to emerging and continually evolving ESG issues;
- directors’ ESG expertise and training;
- the frequency and structure of reporting on ESG issues to the board and applicable committees; and
- management’s roles and responsibilities relating to various ESG issues.
“Given the breadth and rapidly evolving nature of ‘ESG,’ it can be challenging for boards and in-house practitioners to decide how to integrate the topics that are most significant to the company into the board oversight and management structures,” said co-author, Randi Val Morrison, Senior Vice President – Communications, Member Engagement and General Counsel at the Society for Corporate Governance. “The key is to create oversight structures and associated systems for accountability, as well as internal processes and procedures (all adequately supported by documentation and processes), that are uniquely appropriate for the company. Well-considered ESG board and management governance structures, policies, and processes support effective disclosure to investors and other stakeholders.”
About Thompson Hine LLP. Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. Thompson Hine has distinguished itself in all areas of Service Delivery Innovation in the BTI Brand Elite, where it has been recognized as one of the top 4 firms for “Value for the Dollar” and “Commitment to Help” and among the top 5 firms “making changes to improve the client experience.” Thompson Hine’s ESG Collaborative is a multidisciplinary team of lawyers with practical legal and business knowledge to help clients develop, implement and fine-tune ESG strategies. The group uses proprietary SmartPaTH™ tools, significant investments in technology and strategies such as legal project management, flexible staffing and value-based pricing to help clients achieve their objectives while providing enhanced value and predictability. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.
About the Society for Corporate Governance. Founded in 1946, the Society for Corporate Governance, Inc. (the “Society”) is a non-profit organization (Section 501(c)(6)) comprised principally of corporate secretaries and business executives in governance, ethics and compliance functions at public, private and not-for-profit organizations. Members are responsible for supporting their board of directors and executive management in matters such as board practices, compliance, regulation and legal matters, shareholder relations and subsidiary management. The Society seeks to be a positive force for responsible corporate governance, providing news, research and “best practice” advice and providing professional development and education through seminars and conferences. The Society is administered by a national staff located in New York City, by members who serve on board and standing committees and through the member activities of 21 local chapters.