Half of directors say they lack the skills to address climate

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Here’s an article from “ESG Today:

Nearly half of board members report lacking skills and expertise in their organizations for addressing climate issues, even as most acknowledge that a strong ESG strategy can lead to better financial outcomes, according to a new survey by advisory, broking and solutions company WTW and the Nasdaq Center for Board Excellence.

For the study, the Fostering Corporate Governance and Enhancing Board Effectiveness Survey, WTW and Nasdaq surveyed 349 board members across 44 countries.

The survey found that most board members recognized value in sustainability-focused initiatives, with 75% of respondents agreeing that “a coherent environmental, social and governance (ESG) strategy helps to create sustainable organizational value and stronger financial outcomes,” and “alignment with the organization’s business strategy” scoring as the most common factor influencing board members to prioritize ESG themes, cited by 85%.

Additional factors influencing the prioritizing of ESG factors included ethical reasons, by 78% of respondents, followed by long-term value creation, reputation and risk mitigation, while regulatory compliance placed only 6th, cited by 71%.

By ESG focus area, top priorities cited by respondents included human capital at 82% followed by governance at 70%, while only half ranked environmental and climate in their top-three priorities.

Despite acknowledging the value of a strong ESG strategy, many board members said that their organization’s don’t focus enough on sustainability issues, with fewer than two-thirds of (62%) of respondents agreeing that their boards have dedicated sufficient time and resources to governance of their ESG priorities.

Similarly, board oversight of ESG issues appears to be evolving, with an expectation for more specialist responsibilities in the future. While more than half of respondents reported that oversight of ESG governance is performed by a combination of the full board and other committees, 61% of these respondents also said that they expect to see a dedicated ESG or sustainability committee in the next three years, although 71% also acknowledged that some ESG oversight will continue to be a full board matter.

In addition to evolving oversight, boards also appear to expect to invest in ESG-related skills and education. While 48% of respondents reported lacking skills and expertise for addressing climate issues, only 18% expected this skills gap to remain in three years.