Understanding the ‘G’ in ESG

evalu8 - building better boards

We’re delighted to be starting a new blog series with our friends at evalu8. Every month we’ll be looking at different aspects of ESG and sharing insights, learnings and cautionary tales(!). In this first article, evalu8 Director Stuart Frier looks at the ‘G’ in ESG, specifically what ‘good’ governance looks like and why it’s important.

Understanding the ‘G’ in ESG

Corporate governance, the final pillar in ESG, is a vital component for any company's lasting success. The most user-friendly definition of corporate governance came from the late Sir Adrian Cadbury in his seminal 1992 report' - “The system by which companies are directed and controlled”. This definition has given birth to numerous policies, codes and consultancy services. 

Governance therefore must be led by the Board who, in turn, direct and control their companies.  Governance assesses how a company is run and ensures that it acts in the best interest of its stakeholders, shareholders or members. As such it is the foundation for effective corporate and ESG management.

‘G’ is the tip of the spear when it comes to developing a sustainable business model. Good governance allows businesses to build, evaluate, monitor and report socially responsible and sustainable activities. Companies with ‘good’ governance tend to have Boards that understand that implementing ‘good governance’ is as much about behaviour and culture as it is about process.

 To keep organisations on track, numerous ‘codes of best practice’ have evolved. These are no longer just for large listed companies but also exist for private organisations, SME’S, Charities and NHS trusts. Governance has spread its wings dramatically since Adrian Cadburys report in 1992 but there’s never been a more important time  to understand what ‘good G’ in ESG looks like.

If you’d like more information on how to build better boards, please contact Stuart Frier at stuart@governancebestpractice.co.uk