Impact Investing Forum
London. Nov 18-19. (Virtual)
The Board Matrix: The (ESG) Value of Well-Connected Directors S&P GlobalThe Board Matrix: The (ESG) Value of Well-Connected Directors S&P GlobalThe Board Matrix: The (ESG) Value of Well-Connected Directors S&P Global
Corporate boards are responsible to oversee and shape the ESG policies of their organizations. This report examines the relationship between companies and ESG performance, as well as those who are connected via shared board members. It shows that companies with strong boards networks (companies where directors serve on multiple corporate boards or are well-connected to each other) have better ESG outcomes than those with weaker board networks.  Directors with good connections can use their network to find out about emerging ESG trends/best practice and share this information with their companies. Directors with a wide network are more informed than those without a network about the needs of different stakeholders (governments and communities, ESG activists). Companies with well-connected directors have better ESG performance because they are more aware of how to manage stakeholder relations. Companies with strong (or weak) board networks are more proactive in addressing gender diversity issues at the C-Suite as well as at the board level. Firms with strong boards networks are twice as likely have female CEOs than those with weaker networks. Table 1 shows that 16% of directors in companies with strong boards networks are women, while 12% are from firms with weaker board networks. Figure 1. Companies with strong boards networks score better on ESG issues like codes of business conduct, operational efficiency (environmental waste), and labor practices than those with weaker ones. Companies with well-connected directors are less likely to be involved in bribery/corruption cases and generate less environmental waste. They also have higher levels of gender diversity in senior management than those with less connected directors. Figure 1: Median Scores of Companies with Strong and Weak Board Networks Companies are ranked on a scale from 0 to 100: Russell 3000: September 2013 – December 2019.
 The number and composition of all boards on which directors serve is aggregated to calculate a company’s connected score. See methodology. Learn more about the data used in this research by the S&P Global Marketplace