ESG must not neglect governance!
Around half of business leaders believe that taking account of ESG factors enables them to make better decisions for their organisations.
This finding from a recent poll of IoD members emerges at a time when the concept of ESG is becoming increasingly controversial on both sides of the Atlantic.
When asked which component of ESG was the most important, 42% stated that the three components were of equal importance. However, of those who highlighted a specific component, the largest number (26%) stated that the most important was governance. A smaller proportion (17%) highlighted ‘environment’ as the most important and the lowest highlighted ‘social’ (9%).
Commenting on the results, Dr. Roger Barker, Director of Policy and Governance at the Institute of Directors, said:
“Many business leaders see the value of incorporating ESG-type factors into their decision-making processes. However, the rapid proliferation of the ESG industry – in terms of things like ESG ratings and reporting standards – has also given rise to some scepticism and confusion.
“Some see the rise of ESG as facilitating ‘greenwashing’. Others may view it as a manifestation of a political agenda. However, the politicisation of ESG should be resisted, given the essential role that ESG-type factors can play in managing organisational risk and corporate reputation.
“Our members highlight a legitimate concern: by subsuming governance into the broader concept of ESG, the unique role of corporate governance in driving corporate success may be neglected. A solid governance framework is a pre-requisite for success in the other aspects of ESG. Getting governance right should be the starting point for the directors of all kinds of organisations.”
The results of the poll are discussed in a new IoD Centre for Corporate Governance Paper, ‘ESG – Where do we Stand?’, published today.
Full survey results
915 responses, conducted between 10th-26th March 2023
ESG is an increasingly referenced concept in modern business. To what extent do you agree or disagree with the following statements about ESG?
| Strongly Agree | Agree | Don’t know | Neither agree nor disagree | |
| I have a clear understanding of the meaning of ESG | 30.8% | 40.9% | 0.8% | 13.8% |
| Taking account of ESG factors helps me make better business decisions | 17.3% | 32.6% | 3.2% | 29.3% |
Which is the most important to your organisation within ESG: the E, the S, or the G?
| E – environmental policy | 16.72% |
| S – social policy | 8.96% |
| G – governance policy | 25.46% |
| They are of equal importance | 42.40% |
| Don’t know | 6.45% |
