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

Kaveri Power Ltd wants to create a skills matrix to hold the board accountable for climate-related oversight. The Nomination and Remuneration Committee (NRC) finds that none of the directors has climate or energy-transition expertise. What is the most appropriate step consistent with good governance practice?

Climate expertise should stay in the skills matrix as a required competency, the gap should be recorded, and the NRC should recommend an appointment or training to fill it. Deleting the skill or delegating wholly to management would defeat board accountability for ESG oversight.

  1. ADelete climate from the matrix because no director has the skill, so the matrix shows full coverage
  2. BDelegate climate oversight entirely to the CFO and record no board-level skill requirement
  3. CRetain climate expertise in the matrix as a required skill, record the gap, and have the NRC recommend an appointment or structured training to close itCorrect
  4. DAsk the statutory auditor to certify that the board has adequate skills

Explanation

A skills matrix identifies the competencies the board needs for the business and its risks, not merely those it already has. The NRC should recognise the gap and address it through appointment, induction or training. Removing the skill hides the gap, and the board cannot delegate accountability to management or to an auditor.

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