Questions to ask the CEO.
Boards must guide management to frame an agenda for the company to meet its most critical challenges. And that agenda should
include consideration of how the company will shape its future environment, including its contribution to meeting society’s most critical challenges.
And yet, few boards (or management teams) are fully prepared to engage in such an expansive and consequential agenda for the good of the company and the good of society.
How can the board effectively wrestle with the ESG agenda? Engage the CEO on these five questions:
• How can our corporate strategy simultaneously deliver on shareholder returns, strengthen the company for the longer term, and create additional value to society that brings new opportunities and rewards to the company?
• What difference is our company making to the Sustainable Development Goals (SDGs)?
• What are the three biggest societal challenges in each key geography that puts our company’s business at risk; that our company could impact through our core business? How do our strategies in those geographies incorporate those societal risks and opportunities?
• How are our largest institutional investors assessing the company’s performance on what they regard as material ESG metrics? How are we assessing our performance and the rate that we are improving? Are we effectively communicating that performance?
• What are we doing to assure that investors, governments and other stakeholders fully recognize the positive societal value that we are creating? How has that translated into a premium in share price, market position or margins, or expanded our rights to operate, improved the loyalty of our customer base or positioned us better with government?
While the above will certainly challenge the board and management, it promises to open up new insight about the business and its potential. In the process, the board can help guide the CEO to make the calls that will build a great company, a great stock, and great societal impact. That is certainly a legacy to make any board proud.
Dave Young is a senior partner and managing director in the social impact practice at the Boston Consulting Group and former COO of World Vision International. Gerry Hansell is a senior partner and managing director in the corporate development and strategy practices at the Boston Consulting Group.