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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board's Accountability on ESG

Kaveri Foods Ltd's directors want to show they exercised their duty under the Companies Act, 2013 towards the environment and employees. Which action best demonstrates this?

Directors must act in good faith to promote the company's objects for the benefit of its members as a whole, and in the best interests of the company, its employees, shareholders, the community and the protection of the environment, so ESG considerations form part of their statutory duty.

  1. AFocusing solely on maximising dividends for members
  2. BActing in good faith to promote the company's objects for the benefit of members as a whole, while having regard to employees, community and environmentCorrect
  3. CLeaving environmental matters to the regulator
  4. DEnsuring the registered office is in an eco-friendly building only

Explanation

The statutory duty of directors requires acting in good faith to promote the company's objects for members' benefit and in the best interests of the company, its employees, shareholders, community and environment. Focusing only on dividends ignores the wider duty.

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