ESG Governance Structures & Ethical Practices 2

Question 1

Which board committee is primarily responsible for overseeing ESG-related risks and sustainability strategy?

Accepted Answer

Sustainability or ESG Committee

Answer

A dedicated Sustainability or ESG Committee provides focused oversight of climate, social, and governance risks at the board level.

Question 2

What is 'say-on-pay' in the context of corporate governance?

Accepted Answer

A shareholder vote on executive compensation packages

Answer

Say-on-pay gives shareholders an advisory vote on the company's executive compensation policies, enhancing accountability.

Question 3

Under the UK Corporate Governance Code, what is the recommended maximum tenure for a non-executive director before independence is questioned?

Accepted Answer

9 years

Answer

The UK Corporate Governance Code suggests that service beyond nine years may compromise a non-executive director's independence.

Question 4

A company discovers its supplier uses child labor. Which governance mechanism should be the FIRST line of response?

Accepted Answer

Invoke the supplier code of conduct and escalate through the procurement compliance process

Answer

The supplier code of conduct establishes the contractual and ethical framework for addressing violations before escalating to other actions.

Question 5

What does 'board refreshment' refer to in ESG governance discussions?

Accepted Answer

The planned rotation and renewal of board members to bring in new skills and perspectives

Answer

Board refreshment refers to systematic succession planning that introduces new directors with relevant expertise, preventing entrenchment.

(ESG) Certified Environmental, Social, and Governance Consultant Practice Test