KPMG Nigeria urged corporate boards to become active in Environmental, Social, and Governance issues.
Nairametrics reported that this was said by the corporation in its May 2023 ESG Oversight report.
KPMG asserts that it’s critical for businesses to take a stand on problems like climate change, diversity, equality, and inclusion, as well as other environmental, social, and governance threats.
“They are regarded as essential to business and essential to long-term sustainability and value development by investors, research and rating companies, activists, employees, customers, and regulators.”
The report points out that most Nigerian boards do not yet have an ESG committee. Nevertheless, some businesses are starting to assign ESG oversight to committees.
KPMG advised that climate hazards must be included in risk and strategy conversations to help strengthen ESG goals.
“ESG risks, like those associated with climate change, have evolved into essential components of long-term value addition. Whether it be changes in tax and regulatory policies, technology advancements, or consumer behavior, many people believe that the accompanying transition risks are equally essential and even more urgent.”
According to the report, while climate change may at first glance seem to fall under the purview of an ESG responsible committee, it is more than likely to also have an impact on the audit committee (data, systems that generate that data, and disclosures in the annual report), the remuneration committee (management incentives), and the nomination committee (skills and experience of board members and senior management).
“A board with ESG expertise is the first step in the oversight and opportunities of ESG risk. Although it is not necessary for every board member to have extensive ESG knowledge, it is advised that ESG risk and its effect on long-term value generation be given top priority.”
The most risky or strategically important challenges for the company must be identified by the board, along with how they relate to the company’s fundamental operations.
KPMG also noted that good stakeholder engagement can give a company the chance to inspire people to act responsibly and morally in the long run, particularly through the supply chain, which is part of an organization’s circle of influence.
“The board should periodically request information from management regarding the success of the company’s engagement operations in order to better understand the perspectives of its important stakeholders and the company’s capacity to exercise responsible
influence.”
