Private company boards lag behind on ESG, survey finds
WASHINGTON, July 26, 2022 /PRNewswire/ — The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 23,000 directors, today released the findings of its NACD Private Company Board Practices and Oversight Survey 2022 report.
Despite the conflict in Ukrainea supply chain crisis, inflation, an ongoing pandemic, skepticism towards globalization and other issues, increased competition for talent remains the primary concern of private company directors, 77% of survey respondents placing it among the top five issues most likely to affect their business in the coming year.
In comparison, 69% of NACD respondents 2022 Public Company Board Practices and Oversight Survey, published in June, ranked competition for talent among the top five concerns. Inflation is also a growing concern for directors of private companies, who have been on the rise on respondents’ lists for two consecutive years.
“We are proud to share the results of our latest survey of board practices and oversight for private companies, which are delivering tangible, real-time benefits to directors across the country,” said the Chairman and CEO of NACD. Pierre Gleson. “Beyond current trends and statistics, the report offers insight into board dynamics and other areas that are critical for boards to succeed in today’s fast-paced and changing business environment. often tumultuous.”
The results presented below present an overview of board activities and trends in several key areas, including ESG, climate change, cybersecurity, and more, and provide directors with relevant information to help them meaningfully lead their boards in 2023 and beyond.
Other key trends from the 2022 Private Company Board Practices and Oversight Survey:
- ESG practices have not reached the maturity observed in the boards of directors of public companies.
- Fourteen percent of private companies surveyed said their board has not focused on ESG issues in the past year, compared to only 3% of public company respondents.
- Cybersecurity threats are being encountered by corporate boards adopting best practices in greater numbers.
- Sixty-eight percent of respondents have reviewed their company’s approach to data protection and 65% have reviewed the top cyber threats facing their business.
- Human capital monitoring practices such as talent development strategies and metrics reporting are on the rise.
- A majority of boards now discuss company-wide talent development strategies (70%) and broader human capital strategies on a recurring basis (58%), but more work remains to catch up with public company boards in areas of advanced human capital practices such as committee delegation and charter review.
- Board dynamics improve partly due to better and more frequent reporting from management.
- Fifty-eight percent of respondents cited the quality of management input as a key driver of outstanding board performance.
- Climate talks lack priority compared to public company boards.
- Only 30% of respondents indicated that climate-related discussions had increased in frequency on their board (compared to 54% of public company boards). And 25% said climate change is not a concern for their business.
- DE&I practices have increased, but the overall understanding of the issues by the board has slowed.
- There is fairly broad adoption of DE&I oversight, such as senior management reporting key DE&I metrics to the board (59%) and discussing the organization’s DE&I priorities (62%). Only a slim majority (51%) said their board’s understanding of DE&I issues had improved significantly compared to two years ago.
Read the full report published by NACD.
About survey data collection
Leveraging its proprietary member database as a sampling frame, NACD sent email invitations to directors and other board members asking them to participate in the Board Practices and Oversight in 2022 investigation. The survey took place in the field from March 28 to April 21, 2022, and the questionnaire was administered electronically. Respondents have been instructed to respond on behalf of one of the boards to which they belong.
Percentages are based on the total number of specific responses to each question. For example, if a question received responses from only 100 respondents out of a total of 168, and 75 respondents answered “yes” while 25 answered “no”, the result is reported as 75% affirmative. In some cases, survey responses totaling less than 5% are not represented in the charts for clarity.
About the NCD
For more than 40 years, NACD has been at the forefront of corporate governance, setting standards of excellence that have elevated board performance. NACD provides today’s directors with ideas and education that advance their mission, while preparing a new generation of board leaders to meet the greatest challenges of tomorrow. NACD is a community of more than 23,000 directors driven by a common goal: to be trusted catalysts of economic opportunity and positive change, in companies and in the communities they serve. To learn more about NACD, visit nacdonline.org.
SOURCE National Association of Corporate Directors