Nominating and Governance Committee Chair and Risk Oversight Advisory Councils: The Board’s Role in ESG

“These advisory councils bring together directors from some of this country’s most important and diverse companies. Convening a group like this for these important discussions is something that only NACD can do.” - Ted Dysart, Heidrick & Struggles

According to The Collegiality Conundrum: Finding Balance in the Boardroom, PwC’s 2019 Annual Corporate Directors Survey, “More than half of directors (56%) say investors devote too much attention to environmental/sustainability issues, even though only 50% think their board has a strong understanding of the ESG issues impacting their company.”

At the same time, for the first half of 2019, ESG-related contested shareholder votes affected numerous companies. And while the Business Roundtable Statement on the Purpose of a Corporation released in August of 2019 endorsed a broader set of stakeholders, some of which are focused on issues under the ESG umbrella, activist Paul Singer, principal of Elliott Management, told The Economist that the current debate over corporate purpose “risks obscuring the fact that earning a rate of return for pension plans, retirement accounts, universities, hospitals, and charitable endowments and so on is itself a social good. . . .”

Against this backdrop, NACD, Heidrick & Struggles, PwC, and Sidley Austin convened NACD’s Nominating and Governance Committee Chair and Risk Oversight Advisory Councils in New York to discuss both ESG and shareholder activism. The discussion was held using a modified version of the Chatham House Rule, under which participants’ quotes (italicized below) are not attributed to those individuals or their organizations, with the exception of those whose direct quotes were approved prior to publication.