When boards discuss and report on ESG matters
Almost a third (30 percent) of respondents say committees with ESG oversight report to the main board on those issues on an ad hoc basis. The next-most frequently mentioned cadence (24 percent of respondents) is that those committees report at every board meeting, while 13 percent of respondents say they do so at every other board meeting. One in 10 do so just once a year and 9 percent say they do not make such reports.
Thirty-four percent of respondents at mega-cap companies say relevant committees report at every board meeting, compared with 25 percent of those at large caps, 23 percent of those at mid-caps and 24 percent of those at small caps. Reporting on an ad hoc basis takes place at 35 percent of small-cap companies, 34 percent of large caps, 30 percent of mid-cap companies and 20 percent of mega-caps.
Seventeen percent of respondents at small-cap firms say their committees don’t report to the full board on ESG matters, compared with just 2 percent of those at large-cap companies and none of those at mega-caps.
Twenty-nine percent of respondents in North America say their committees report on ESG issues at every board meeting, while 20 percent of those in Europe cite the same frequency. Almost a third of North American respondents say reporting is done on an ad hoc basis, compared with 22 percent of those in Europe.
Perhaps not surprisingly, the frequencies with which respondents say the main board has discussed ESG issues over the past year follow a similar pattern to that of committee reports. Globally, 29 percent say main-board discussions took place at every meeting, while the same number say they occurred on an ad hoc basis. Eighteen percent say discussions took place at every other board meeting, 11 percent say they took place once during the past 12 months and 3 percent say they didn’t happen at all.
More respondents at mega-cap companies (43 percent) say their board has discussed ESG issues at every meeting over the past year than do those at large caps (30 percent), mid-cap firms (30 percent) or small-cap companies (22 percent).
Approaching half (45 percent) of respondents at small-cap companies say that during the past year their board discussed ESG matters on an ad hoc basis, compared with a quarter of those at mid-cap companies, 27 percent of those at large-cap companies and just 11 percent of those at mega-caps.
ESG topics are featuring on board meeting agendas more frequently at a large majority of companies. Globally, 80 percent of respondents report a slight or large increase in the frequency of main-board discussions of ESG issues compared with two years ago, while 60 percent say there has been a large increase compared with three years ago. Thirteen percent say there has been no change in the frequency of these discussions over the past two years and just 1 percent have seen any kind of decrease.
Almost half of respondents at mid-cap companies say there has been a large increase in the frequency of board-level ESG discussions over the past two years. This figure is lower at large caps (43 percent), small caps (35 percent) and mega-caps (27 percent).
For the latter category, this may be due to mega-caps beginning their ESG discussions relatively early, although 79 percent still report a slight or large increase in the frequency of discussions at board level. All respondents at large-cap companies say there has been an uptick to some degree, compared with 71 percent of those at small caps.
There are broad regional similarities here: 79 percent of those in North America and 84 percent of those in Europe say there has been a slight or large increase in the frequency of main-board ESG discussions compared with two years ago. Sixty-one percent of those in North America and 62 percent of those in Europe say there has been a large increase compared with three years ago.
Globally, board diversity is the ESG issue most frequently cited by respondents as having been discussed by their board over the past year. This varies significantly between the smallest and largest issuers, however: almost all respondents at mega-caps (94 percent) say the topic has been discussed, compared with 76 percent of those at large caps, 85 percent at mid-caps and just 63 percent of small caps.
Among all respondents, the next-most frequently discussed topics are corporate culture (75 percent), environmental issues (74 percent), staff retention, hiring and training (72 percent), employee diversity data and health and safety (both 65 percent) and board effectiveness on ESG oversight (61 percent). Respondents at mega-caps more frequently cite each of these areas – bar staff retention, hiring and training – than those at smaller firms. Similarly, 59 percent of respondents at mega-caps say their board has discussed racial equality, compared with 32 percent at large caps, 38 percent at mid-caps and 22 percent at small caps.
Another difference between the largest and smallest firms is that 44 percent of respondents at mega-caps say their board has talked about political lobbying and spending, compared with just 17 percent, 6 percent and 10 percent of those at large caps, mid-caps and small caps, respectively.
