Public companies’ boards of directors are to consider ESG factors in their strategies
Boards of directors should estimate how ESG factors might impact companies in terms of risks and new opportunities, determine sustainable development goals and objectives, and establish clear criteria for assessing their progress in this area.
Today, we observe a global redistribution of capital flows in favour of the markets promoting sustainable development goals. The current transformation is not only a challenge that companies need to respond to, but also a variety of new opportunities opening up to them. The integration of ESG and sustainable development issues into companies’ strategies and corporate governance systems are essential for creating their long-term value. Hence, it is critical for boards of directors to consider this topic comprehensively in their strategic planning.
The Bank of Russia recommends that companies should analyse their corporate governance systems to find out whether they properly take into account ESG factors and sustainable development issues. This will help companies assess their current situation relative to their target models. According to the Bank of Russia’s recommendations, when carrying out such assessment, companies should consult not only with shareholders, but also with a wider range of stakeholders. Thus, companies will develop a complete and comprehensive understanding of the situation and will be able to forecast possible environmental, social and corporate governance risks.
The recommendations elaborate on the provisions of the Corporate Governance Code regarding the role and key functions of boards of directors. These are corporate governance systems and processes that determine the effectiveness of companies’ social and environmental policies and, ultimately, the results of their business.