There is growing evidence of the correlation between good corporate governance standards and better risk-adjusted investment returns, which ultimately could help enhance the company’s ability to attract capital. 

This is particularly true for institutional investors who require robust governance practices before they are willing to commit their long-term capital. Moreover, with regulators raising the bar on sustainable business practices, asset managers and asset owners are paying more attention to the potential risks and opportunities embedded in their prospective investees' governance and ESG standards. This has resulted in company's boards and top executives to come increasingly under pressure from stakeholder capitalism, potentially facing the risk of litigation, reputational damages, and regulatory fines. 

Owners of capital – asset owners, asset managers and individuals – are one of the big drivers of such activism, supported by technology and social media to help broaden their influence. Against this backdrop, investors must uphold their fiduciary duties to ensure that companies will avoid greenwashing risks and deliver on their sustainability objectives. Boards play an important role as company stewards and are responsible for guiding management in setting the company’s sustainability strategy. Therefore, governance and ESG standards are an important part of board's agendas. 

Topics ranging from the path to decarbonisation to diversity at the board level to linking executive pay to ESG performance are gaining prominence in boardrooms. As the boards' roles continue to expand, it is also important to remember that boards are not only influencing the internal corporate strategy but also the actions taking place in the entity's value chain. 

To discuss this important topic, Impact Boards EM and Delphos brought together stakeholders influencing the flow of capital investment. Speakers discussed current trends in this debate, whether it is gaining momentum and where, how boards can drive a top-down implementation of the ESG agenda, and how better alignment between investors and companies' directors can help address challenges associated with climate change, diversity and risk management.