Leadership changes, once non-financial performance starts to count

October 10 2022
Education

Leadership changes when executives are held accountable for their contribution to people, the environment, and society. So say more than three-quarters of policymakers in a recent survey by KPMG and Nyenrode Business University.

Environmental, social, and governance

Policymakers also believe it is time for boardrooms to be evaluated based on environmental, social, and governance (ESG) developments in their organizations. About half of the respondents (46%) say the Netherlands is ahead in this area. At the same time, there is room for improvement: on average, decision makers give themselves a failing grade (5.4) in relation to their own ESG knowledge.

Responsibility

The ESG knowledge survey by KPMG and Nyenrode Business University shows that 38 percent of respondents believe the responsibility for ESG policy lies with the board and management. Others see a primary role for the sustainability department (10 percent), business operations (8 percent), or HR (7 percent). More than a quarter of those surveyed have no idea where this responsibility should lie.

ESG is on the agenda, but there are still many steps to that still need to be taken. "Business leaders often do not know how to approach it. For example, 78% of those surveyed say lack of knowledge is a threat to the route to a fully sustainable economy,” said Jessica Peters-Hondelink, Director of Executive Education at Nyenrode and co-founder of the ESG Innovation Institute. "And more than six in 10 policymakers say in doing so, ESG policy for their organization is still stuck in targets and 'first steps.' This is exactly why we invest in the ESG Innovation Institute and in academic research and developing executive programs where leaders learn from and with each other how to tackle ESG transformation."

Ethical business practice

"When it comes to sustainable business, environmental issues are often thought of first. But employee health, inclusiveness within the organization and ethical business practices also fall under ESG policy," said Stephanie Hottenhuis, CEO and chairman of the board at KPMG Netherlands. She says it is important to be driven not by legislation but by one's own strategy, and to develop ESG policies from that. "That is when you really transform as an organization."

KPMG and Nyenrode have set up the ESG Innovation Institute to help organisations make the transition to sustainability. Organisations can create added value in their business operations by balancing financial and economic results, transparency, social interests and the environment. We aim to make the latest ESG knowledge, skills and ecosystem accessible to executives who want to accelerate the route to sustainability in a professional and informed way.

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