IoD outlines governance priorities for businesses

The Institute of Directors has published a policy paper setting out some of the key environmental, social and governance (ESG) priorities for UK companies.

The IoD says that environmental, social and governance considerations are increasingly important decision-making criteria for all types of organisations, not only as a means of winning the trust of stakeholders but also as barometers of effective business management. The IoD’s checklist of ESG priorities that boards should be focusing on in 2022 includes: stakeholders and business purpose; sustainability; inclusion and diversity; governance; and executive remuneration.

Dr Roger Barker, the report’s author and IoD director of policy and corporate governance, said: “A strong ESG profile is attractive to potential investors, lenders, employees and customers, and helps build the brand of the organisation. Conversely, weak ESG performance is a red flag. It could indicate that the company’s leadership is not well aligned with the interests of wider society, bringing its longer-term sustainability into question.

“Although a focus on ESG is emerging as a mainstream business priority, there remains a body of opinion which argues that it comes at the expense of focusing on the fundamentals of the business. Such an attitude is increasingly at odds with the demands of younger customers and employees who expect companies to stand for something with a positive social impact.”

The full IoD Policy Paper – ESG Priorities for UK Companies 2022 – can be downloaded here.

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