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    The ESG knowledge gap on executives and boards education

    The ESG knowledge gap on executives and boards education

    ESG is the dominating trend in the marketplace the last few years. However, a knowledge gap on executives and boards still exists, leaving the industries unable to adapt to current demands.

    The mounting pressure on companies to incorporate ESG practices is never ending, with existing and new regulatory requirements pushing business leaders to rethink their approach. Moreover, the demand for ESG skills is outpacing supply, while the lack of appropriate education has a moderate impact on the organizations, holding them back when it comes to delivering their ESG agenda.

    According to a recent survey, 44% of directors stated that the lack of knowledge or capabilities are the main barriers to achieving ESG goals, while a 70% reported that they were only moderately – or not at all – effective at increasing board oversight on ESG. Moreover, 30% of them reported that there is lack of board and management commitment.

    Why does the ESG knowledge gap exist?

    Limited sustainability knowledge

    Lack of basic knowledge on sustainability is still the biggest barrier to addressing ESG issues. This lack of knowledge is also accompanied by the confusing terminology in the marketplace, which is currently more than enough.

    Taking into account the financial sector, only 13% of 3,700 senior ESG staff members at the world’s top 100 largest banks and 100 largest asset management firms hold a degree related to ESG. The impressive outcomes have been provided by a Capital Monitor’s analysis.


    Relationship between ESG criteria and business impacts

    Business leaders cannot clearly understand the relationship between ESG criteria and business impacts. What C-suite executives need to learn is what criteria materially impact their business. Only then, an integrated strategy can be developed and communicated effectively to the board.

    It is crucial to know that materiality differs depending on the sector and the company’s business model. Conducting an ESG materiality assessment is the very first step to identify which issues are material to you and your stakeholders.


    Board and executive ESG competence

    Even if the basic knowledge on ESG issues exists, a great number of board members and C-suite executives is still ill-equipped to oversee climate and ESG risks. According to a recent survey gauging the views of public company directors from across the United States, only 25% of the directors support that their board understands the company’s climate risk or strategy. This means that companies may need to reassess the current skillset of the boards.

    The value of ESG education cannot be neglected. Boards and C-suite executives with the right skillset are necessary for effective business operation.

    Enhance your oversight and decision-making capabilities on delivering an ESG agenda by enrolling to Sustainability Academy’s certified courses.


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