Nearly 96% of Board Directors Expect a Continued or Stronger Focus on ESG Despite Ongoing Backlash

Renewed focus on DEI, climate change, and disclosure enhancements prompt directors to seek more consistent and robust data in an effort to increase transparency.

Nearly 96% of corporate boards expect a continued or stronger focus on ESG over the next five years, with diversity, equity and inclusion (DEI) and climate change topping the list of priorities, according to the new Sustainability in the Spotlight 2024 report from Diligent and Spencer Stuart. The report reveals how directors are looking for more specific data and insights on the material issues facing their companies to better balance the risks and opportunities surrounding ESG.

While sustainability in the corporate world has been defined by flux, the reality is very few companies are backing away from their ESG ambitions, with 53% of companies aspiring to be seen as sustainability leaders. The largest obstacle to ESG is actually internal, with almost 25% of respondents naming competing business or strategic interests within their own organizations as the number one barrier to executing on an ESG strategy. And despite worldwide debate over the merits of “ESG” as a catch-all term, 56% of boards still say they use “ESG” to describe these issues.

“Corporate boards today recognize both the risk of ignoring ESG initiatives and the reward that comes from standing strong in upholding them,” said Dottie Schindlinger, Executive Director of the Diligent Institute. “The data shows us that while ESG oversight has become an established board function, directors still need more clarity and insights to respond to regulatory demands and become better stewards of their organizations’ ESG efforts.”

In the report, Diligent and Spencer Stuart surveyed over 800 global board members. Additional findings include:

For most boards, public backlash around ESG is not a major concern

• Only 3% of respondents cite ESG backlash as a major obstacle (a slight increase over 2% in 2023).
• When asked about the effects of public backlash around ESG, only 4% said it caused their organizations to abandon or dial back ESG efforts.
• 17% said their organizations changed the terminology or level of publicity around their ESG goals, without changing course.

Boards understand the organizational risk in not pursuing ESG

• Only 26% of directors said their companies thought about ESG more in terms of opportunities than risks, compared with 40% in 2023.
• 62% of respondents say their organizations are enhancing ESG disclosures, reports, and filings.
• 35% are focused on keeping up with evolving voluntary standards.

European and Asia-Pacific boards remain more engaged with ESG than their U.S. counterparts

• Regionally, boards of European companies and companies in the Asia-Pacific region are more likely than those in North America to be taking action in light of ESG regulations, at 96% and 94% versus 84%.
• ESG priority skews to the high side of board concerns in APAC (51%) and Europe (46%). Among North America respondents, only 22% named ESG as a high-level concern versus 52% who named it a mid-level concern.

“Our insights suggest that despite some headwinds, companies across the globe are continuing to strengthen their sustainability commitments, as the bar steadily rises for compliance and performance,” said Jason Baumgarten, Head of Spencer Stuart’s Global Board and CEO Practice . “Board directors are ensuring their organization stays the course in calibrating and achieving sustainability goals, and their stewardship will play an outsized role in striking the right balance between risk mitigation and growth opportunities going forward.”

For more information, view the full report here.

Methodology

Diligent Institute and Spencer Stuart surveyed 801 board members in March 2024. The respondents span public, private and pre-IPO organizations across 14 industries. U.S.-based companies account for 42% of the respondents; 36% represent companies based in the European Union or the U.K. (referred to as “Europe” in the report); and the remainder represent companies based elsewhere across the globe.

The report contains global analysis, as well as regional breakdowns comparing responses from board directors of companies based in the U.S., Europe and the Asia Pacific region. It also compares the sustainability perspectives and activities of boards in public and private companies.

About Diligent

Diligent is the leading GRC SaaS company, empowering more than 1 million users and 700,000 board members and leaders to make better decisions, faster. The Diligent One Platform helps organizations connect their entire GRC practice — including governance, risk, compliance, audit and ESG — to bring clarity to complex risk, stay ahead of regulatory changes and deliver impactful insights, in one consolidated view. Learn more at diligent.com.

About Diligent Institute

Diligent Institute informs, educates, and connects leaders to champion governance excellence. We meet this mission through original, cutting-edge research on critical corporate governance issues, certificate programs for corporate leaders, peer networks that convene directors and executives to share best practices, and recognition programs that celebrate governance excellence. Diligent Institute was founded in 2018 as Diligent’s global corporate governance research arm and think tank. Learn more at diligentinstitute.com

About Spencer Stuart

At Spencer Stuart, we know that leadership has never mattered more. We are trusted by organizations around the world to help them make senior-level leadership decisions that have a lasting impact on their enterprises, on their stakeholders and the world around them. Through our executive search, board and leadership advisory services, we help build and enhance high-performing teams for select clients ranging from major multinationals to emerging companies to non-profit institutions.

Privately held since 1956, we focus on delivering knowledge, insight and results through the collaborative efforts of a team of experts — now spanning more than 70 offices, over 30 countries and more than 50 practice specialties. Boards and leaders consistently turn to Spencer Stuart to help address their evolving leadership needs in areas such as senior-level executive search, board recruitment, board effectiveness, succession planning, in-depth senior management assessment and development, and many other facets of culture and organizational effectiveness, particularly in the context of the changing stakeholder expectations of business today. For more information on Spencer Stuart, please visit www.spencerstuart.com.

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