Company-Specific ESG Adoption Pushes Leaders to Dig Deeper

The emergence of ESG issues has generated a wholesale reevaluation of corporations’ so-called social compact. Accordingly, corporate executives and boards of directors are expected to attend to an expanding list of ESG topics. While governance can be evaluated across different companies using a standardized checklist of best practices, a prescriptive, one-size-fits-all approach does not work for environmental and social issues. Global E and S standardization continues to be an important goal, however, a bespoke analysis of individual companies on E and S issues will continue to be necessary.

These are the main issues raised in the paper written by John Wilcox, Chairman Emeritus of Morrow Sodali, and published in Sustainable Brands. “It is important to carefully consider whether the financial materiality standard is sufficiently comprehensive to embrace ESG issues,” remarks John. The rise of company-specific materiality assessments will over the long term require companies to undertake substantial organizational and behavioral adjustments. This transition will also impact institutional investors who will need to reduce their reliance on standardized metrics, regulatory guidelines and wholesale recommendations from outside advisors and service providers and dig more deeply into the inner workings of individual portfolio companies and systematically engage with their management.

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