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Boards see improvement opportunities in climate and governance areas

Fostering Corporate Governance and Enhancing Board Effectiveness Survey findings

July 11, 2023

Board members see opportunities to improve oversight of climate risk and are open to new approaches to board assessment. Those are among the findings of a recent survey conducted by WTW and the Nasdaq Center for Board Excellence.
ESG and Sustainability|Executive Compensation
ESG In Sight
Boards see improvement opportunities in climate and governance areas

75% of board members agree a coherent environmental, social and governance (ESG) strategy with clear priorities helps create sustainable organizational value and stronger financial outcomes

Business strategy is a more commonly cited influence on ESG priorities than regulatory compliance

Most commonly cited factors influencing ESG priorities*

  • Alignment with the organization’s business strategy - 85%
  • Ethical reasons - 78%
  • Long-term value creation opportunities - 74%
  • Business reputation among stakeholders - 73%
  • Risk mitigation - 71%
  • Regulatory compliance - 71%

*4/5 – To a very great extent on a 5 point scale.

Yet, they acknowledge opportunities to enhance education on how to address environmental concerns

Respondents report lacking skills and expertise for addressing climate issues

Today: 48% In three years: 18%

Board members embrace new approaches to board assessment

Most commonly cited criteria for evaluating board effectiveness: the assessment of board composition, skills and diversity

The number of respondents citing third-party assessments and facilitated workshops as a top three method for assessing board effectiveness is expected to double in three years

How do you currently assess the effectiveness of the board? What other techniques or tools would you consider adding over the next three years?
Top 3 technique or tool used today to assess board effectiveness Top 3 technique or tool used over the next three years to assess board effectiveness
Third party assessment of board dynamics and culture 8% 21%
Facilitated board workshop to review areas for improvement 10% 25%

Oversight will continue to be an issue for the full board 

But 3 in 5 organizations that use a combination of full board and committees expect to have a standalone ESG, corporate social responsibility (CSR) or sustainability committee in three years

  • Full board and other committee(s): 51%
    • Full board: 87%
    • Nomination and governance committee: 51%
    • ESG, CSR or sustainability committee: 60%
    • Risk/finance committee: 64%
    • Compensation/remuneration or human capital committee: 47%
    • Other: 5%
  • Other committees: 8%
  • Single committee: 14%
  • Full board only: 27%

Note: Based on those with overlapping responsibilities

Increasingly complex ESG-related governance risks require a stronger focus

Only 3 in 5 board members think their board has dedicated sufficient time and resources to governance in the context of their ESG priorities and agenda

62% - Strongly disagree/disagree
14% - Neither agree nor disagree
23% - Agree/strongly agree


Actions to take now!

  • Address skill and knowledge gaps in face of emerging risks and climate transition
  • Determine if your board is dedicating sufficient time and resources to governance risks
  • Evaluate whether ESG oversight responsibilities are appropriately divided between the full board and committees
  • Ensure management has a succession plan for all executive leaders, especially in emerging areas such as risk
  • Enhance board effectiveness with new evaluation techniques, potentially leveraging external expertise

About the survey: A total of 349 board members from 44 countries across six continents participated in the Fostering Corporate Governance and Enhancing Board Effectiveness Survey, which was conducted between February 15 and April 7, 2023.

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