PwC released results from the firm’s Annual Corporate Directors Survey, revealing that while ESG issues are more frequently discussed at the board level, most board directors still do not believe that they have a financial impact on their companies. While ESG appears to be gaining in importance for board members, the survey findings indicate that it is not yet a priority at many companies.

PwC surveyed nearly 700 directors for the study, across more than a dozen industries. 75% of directors represented companies with revenues of more than $1 billion. PwC stated that 76% of the respondents were men and 24% were women, and 61% of respondents have served on their board for more than five years.

According to the findings of the survey, 45% of respondents reported that ESG issues are a regular part of their boards’ agenda, compared to on 34% in 2019. While less than half of directors felt that disclosure of ESG-related issues should be a priority for management, this figure was an improvement from only 30% in 2019. Additionally, only 38% of directors say ESG issues have a financial impact on their companies, well below last year’s level of 49%.

Paul DeNicola, Principal, Governance Insights Center, PwC US, said:

“Directors are coming around to the idea that ESG is about opportunity as well as risk. Boards are starting to link purpose to company strategy, and realizing that in order to track their progress on critical items, such as climate change and income inequality, they will need accurate reporting and data on ESG.”

The survey also appears to indicate that boards’ attitudes towards diversity are not aligned with those of many investors. While 84% of respondents agreed that companies should do more to promote diversity in the workplace, only 39% support linking executive compensation with diversity goals. Interestingly, 44% of female directors reported that board leadership is not invested in board diversity, compared to only 20% of male respondents.

Paula Loop, Governance Insights Leader, PwC US, said:

“Corporate directors are still figuring out how to take the next meaningful step on diversity within the organization. Boards can start by making sure that they are receiving diversity data and including diversity in executive compensation plans. It’s also important for directors to lead by example and make diversity a priority within the boardroom itself. Boards can use succession planning to strengthen the boardroom by introducing a broad range of experience, thought and voice.”

Other findings from the survey include:

• 67% of directors believe that issues like climate change should be taken into account when developing company strategy.
• 50% of directors say their board fully understands ESG issues impacting the company.
• 32% of female directors believe the CEO is not invested in board diversity compared to 9% of their male counterparts.
• 47% of male directors point to a lack of qualified candidates as a reason for diversity lagging on boards compared to 25% of their female counterparts.
• Only 34% of directors believe it is very important to have racial diversity on their board.