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

Sagar Chemicals Ltd's board delegated ESG oversight to a Sustainability Committee. Later, a major environmental violation came to light because the committee never received any ESG data from management and never asked for it. The board argues that the committee alone is responsible. Which view is most consistent with the principles of board accountability?

The board remains accountable. Delegating to a committee does not remove its duty to set the mandate, make sure ESG information reaches the committee, and monitor that oversight works. Blaming only the committee, its chair or executive directors ignores the board's collective responsibility.

  1. AThe board is fully absolved, since it delegated the matter to a duly constituted committee
  2. BOnly the committee chairperson bears responsibility, and other directors bear none
  3. COnly the executive directors are responsible because they manage operations
  4. DThe board cannot escape accountability, as delegation requires it to set the committee's mandate, ensure information flows, and monitor that oversight actually happensCorrect

Explanation

Delegation does not discharge the board's duty of oversight. The board must define the mandate, ensure reliable reporting lines and check that the committee functions. Because no information reached the committee and the board did not detect this, the board's oversight failed. Absolving the board or isolating one person ignores collective accountability.

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