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

Sagar Foods Ltd, a listed entity, wants to give a Board committee primary responsibility for ESG oversight, and the Chairman suggests the Risk Management Committee could take up sustainability-related risk review. Which approach is most defensible?

The Board may assign ESG oversight to a suitable committee such as the Risk Management Committee or a dedicated one, but ultimate accountability remains with the full Board. Delegating review work to a committee does not relieve the Board of its responsibility.

  1. ANot permitted, since only a newly formed ESG committee may review ESG matters
  2. BPermitted, since the Board may allocate ESG oversight to a suitable committee, while retaining ultimate accountability itselfCorrect
  3. CPermitted, and the Board is then relieved of all accountability for ESG
  4. DPermitted only if the committee has no independent directors

Explanation

Boards commonly assign ESG oversight to an existing or dedicated committee, and sustainability risks fit within risk management. Delegation to a committee does not shift ultimate accountability from the full Board, so the option relieving it is wrong.

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