Board oversight: Required ESG for public companies in Europe

Abstract

Boards of directors now have a powerful monitoring guidance from the European Sustainability Reporting Standards (ESRS) to assess the required environmental, social, and governance (ESG) reporting and performance of their European public companies. Boards can now assess whether their companies are committed to ESG efforts or just greenwashing, i.e., just making commitments or pledges without any substantial subsequent performance. The main purpose of this paper is to examine and propose how boards of directors can oversee and facilitate this sustainability transition toward mandatory European ESG reporting. In the existing literature, there are currently no research papers that address this topic which is developing so rapidly. Boards of directors could also help assess if such ESG sustainability requirements are aligning with and delivering value to shareholders, customers, employees, communities, and other stakeholders. Future research could investigate these board responsibilities with case studies or empirical studies, especially to see if ESG reporting is becoming relevant and valuable.