CGI Sample Terms Of Reference For Board ESG/sustainability Committees

The Chartered Governance Institute (CGI – formerly known as ICSA) has published sample terms of reference for board ESG/sustainability committees.

Companies are not required to have an ESG committee at board level under the UK Corporate Governance Code (nor will it be a requirement to have one under the 2024 Governance Code, which will apply to financial years beginning on or after 1 January 2025). However, the CGI has observed that a number of listed companies have formed ESG committees, with over 35% of the UK's 150 largest listed companies having a board committee specifically for ESG-related matters as of April 2023, according to data cited by the CGI.

The sample terms of reference are designed to help companies set out the remit, role and responsibilities of a board-level ESG committee and can be adapted to suit the needs of an individual company. When setting the terms of reference, companies will need to ensure that there is no overlap with, nor gap between, matters falling within the terms of reference for another board committee or which remain reserved to the board as a whole. The CGI terms of reference for audit, nomination and remuneration committees are also available from the members' section of the CGI website.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.