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

Vanguard Textiles Ltd, a listed company, has customers, employees, suppliers and local communities affected by its operations. The board wants to decide whom to engage on ESG matters. Which approach best reflects the board's accountability on stakeholder engagement?

The board should identify stakeholder groups that materially affect or are affected by the business and engage them through defined channels. Restricting engagement to shareholders or complainants misses material groups, and delegating wholly to others removes the board's accountability for ESG oversight.

  1. AEngage only the shareholders, since they own the company and appoint the board
  2. BIdentify stakeholder groups that are materially affected by or can affect the business, and engage them through defined channelsCorrect
  3. CEngage only those stakeholders who have filed legal complaints against the company
  4. DDelegate engagement entirely to the vendors without any board oversight

Explanation

Board accountability on ESG requires the board to identify material stakeholders, meaning those who affect or are affected by the business, and to engage them through structured channels. Limiting engagement to shareholders or to complainants ignores other material groups, and abdicating oversight removes board accountability.

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