That’s the contention of the authors, who offer a research-based framework called SCORE to guide boards’ actions: Simplify-define and communicate your purpose clearly Connect-link your purpose to strategy and capital allocation decisions Own-ensure that all employees embrace the firm’s mission and have the means to deliver on it Reward-tie executive compensation to metrics that include ESG performance Exemplify-use data and narrative accounts to show stakeholders how you’re achieving your purpose and improving sustainability. To build long-term profitability, boards of directors must pay more attention to ESG concerns-and a compelling corporate purpose should underpin their efforts. He makes five recommendations: Identify the material issues in your industry and develop initiatives that set your firm apart from rivals create accountability mechanisms to ensure the board’s commitment infuse the whole organization with a sense of purpose and enthusiasm for sustainability and good governance decentralize ESG activities throughout your operations and communicate regularly and transparently with investors about ESG matters. What they need to do, says Harvard Business School’s George Serafeim, is integrate ESG efforts into strategy and operations.
Companies don’t win over investors just by issuing sustainability reports and engaging in other standard ESG practices.
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