Science and technology. Health and safety. ESG and sustainability. A few years ago, board committees on such topics were nearly non-existent. But as boards expand their role to address a broadening array of topics, they are not only assigning responsibilities to existing committees but also starting to form new types of committees.
As detailed in a new report by The Conference Board with data from ESGAUGE, 74% of S&P 500 firms have more than the three committees required by stock exchange listing standards: 36% have four, 21% have five, and 13% have six. When it comes to the allocation of ESG responsibilities, virtually all S&P 500 firms disclose assignment of such responsibilities to the full board and/or one or more committees. For example, 89% of the companies have assigned human capital management issues (including DEI, employee health and safety, talent recruitment and development, corporate culture, among others) at the board or committee level.
The share of S&P 500 board committees on science and technology increased from 10% in 2018 to 14% in 2023, and committees on environmental, health, and safety increased from 7% to 10%. ESG and sustainability committees are just starting to emerge. As new types of committees begin to take root, there has been a slight decline in some of the traditional board committees, including the executive committee (from 33% in 2018 to 31% in 2023) and finance committee (from 30% to 25%).
“The traditional approach of having three standing board committees—audit, compensation, and nominating—was established over 20 years ago when the focus was on the board’s independent oversight of management. While boards still fill that role, they are increasingly serving as strategic thought partners for management across a broader array of topics, and boards should take a fresh look at whether their committee structure effectively supports the board’s current remit,” said Paul Washington, Executive Director of The Conference Board…
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