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

Tarang Industries Ltd is a listed company required to file the Business Responsibility and Sustainability Report (BRSR). The board wants to know which body would ordinarily be the best placed to monitor the company's ESG risks as part of its mandate, using an existing statutory committee rather than creating a new one. Which committee fits best?

The Risk Management Committee is best placed, because it oversees the company's risk framework and that framework covers sustainability-related risks. The Stakeholders Relationship Committee focuses on security-holder grievances and the Nomination and Remuneration Committee on appointments and pay, so neither is the natural home for ESG risk.

  1. AStakeholders Relationship Committee, as the committee that handles all ESG risks
  2. BRisk Management Committee, as it oversees the risk framework including sustainability-related risksCorrect
  3. CNomination and Remuneration Committee, as it monitors environmental risks
  4. DShare Transfer Committee, as it handles non-financial risk

Explanation

For listed companies, the Risk Management Committee oversees the risk management framework, and sustainability-related risks are expressly part of the risks it addresses. The Stakeholders Relationship Committee deals with security-holder grievances, and the Nomination and Remuneration Committee deals with appointments and pay, not environmental risk monitoring.

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