Speaker Summary: Professor Simon Learmount

28 Jun 2023

The state of ESG in the boardroom in Europe


Simon Learmount, Associate Professor from the University of Cambridge, explored the feelings in European boardrooms regarding ESG: it is here to stay. With the mindset that ‘what gets measured gets done’, ESG has fundamentally changed the attitudes of companies, and specifically boards, towards environmental stewardship. The complex, and rapidly evolving, regulatory landscape for ESG across Europe is driving important shifts in corporate strategy and governance, with company directors feeling increasing personal responsibility for the risks that their organisations bear.

Key Takeaways

  • ESG has changed the nature of the debate in the boardroom regarding a company’s relationship to the environment. In particular, the idea of ESG awareness and reporting has matured in the last year or so, and one of the things that’s becoming quite clear in boardrooms is that this is different to corporate social responsibility (CSR). Social responsibility has been part of the business conversation since the 1930s, but ESG has really reframed the nature of the debate. Furthermore – ESG is here to stay. Some of the recent backlash against ESG and ‘woke capitalism’ is subsiding; for example, we’ve seen the recent decline of anti-ESG funds in Q1 and Q2 of 2023. This backlash and cynicism arguably has not been as strong in Europe as in the US.
  • Boards are facing an incredibly complex regulatory environment that they must constantly adapt to, but this is still driving vital change. Stock exchanges, accounting bodies (nationally and internationally), and industry bodies all require the disclosure of information and data, and many are coming up with new standards. There is also the European Green Deal (which sets Europe on a path to be a carbon neutral continent by 2050). One of the most important changes within the European Green Deal is the Corporate Sustainability Reporting Directive (CSRD). This was introduced in January 2023, and immediately companies and boards were focused on what they needed to do as a result. Added to this are transposition issues, for which every EU Member State has its own way of interpreting the directives. Plus, the UK and Switzerland have their own set of rules. Whilst the landscape is confusing, there is a clear requirement for urgent change within organisations – and this is driving shifts in corporate governance structures and strategy. At the heart of this is the idea that what gets measured gets done.   
  • Individual directors are feeling a strong responsibility for the risks that their companies bear. Although the Client Earth action against Shell was not successful, it was still important because it showed the potential for directors to be held personally liable for failing to meet their ESG commitments. This is not an action taken against the company, but against the directors individually. This is directly impacting boards and is further driving shifts in strategy and governance. In the UK, the Financial Reporting Council (FRC) has been developing its corporate governance principles in consultation with directors and wider stakeholders, especially with respect to ESG and disclosure obligations. This could also be a precursor to changes to the Companies Act where directors would be made responsible not just to shareholders to but to all stakeholders.


In Europe, the rapidly evolving ESG landscape has had a profound impact on the key board-level areas of activity – risk management, governance and corporate strategy.  The possibility that directors may ultimately have a legal duty to all stakeholders further underlines the serious nature of the challenge and the urgent need for robust action.


Simon Learmount – Cambridge Judge Business School

Navigating the Climate Disclosure Landscape | Climate Governance Initiative (climate-governance.org)

Corporate sustainability reporting (europa.eu)

Our groundbreaking case against Shell’s Board of Directors | ClientEarth

FRC launches consultation on changes to the UK Corporate Governance Code | Deloitte UK