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

Meridian Textiles Ltd, a listed company, wants to place formal oversight of its climate-related targets and ESG performance at the highest level of its governance structure. Which arrangement best reflects the board's accountability for ESG?

The board keeps ultimate accountability for ESG and may delegate detailed oversight to a board committee that reports back to it. Delegating work to management or a committee does not transfer responsibility, so shifting it to the sustainability head, auditor or shareholders is incorrect.

  1. AThe board retains ultimate responsibility, and may delegate detailed oversight to a committee that reports back to itCorrect
  2. BThe board hands over all ESG accountability to the sustainability head, who reports only to the CEO
  3. CAccountability rests with the statutory auditor, who certifies ESG performance each year
  4. DAccountability rests with the shareholders in general meeting, so the board has no role

Explanation

Under governance principles, the board is ultimately accountable for ESG strategy and oversight. It can delegate detailed review to a committee or management, but delegation does not remove its accountability. The other options place accountability outside the board, which is wrong.

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