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Motivating boardroom ESG decisions: ESG ratings vs. climate migration

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By Enoch Opare Mintah

· 9 min read

The recent IPCC report has been validated by the recent heatwaves across the UK, parts of Europe and America, not to mention the plethora of current flood and fire disaster references to corroborate the significant impact of climate change. Simply put, there is no politicking about the reality or truth of climate change although approaches to mitigating its challenges show otherwise. 

While climate change and climate-induced disasters are no new phenomenon due to the verifiable history of their impact, the clarion call and urgency for climate change mitigation actions have been fueled by, for example, the proliferation of ESG-related initiatives and activities - investing, practices and disclosures. While there is no single approach to building a concerted effort to fight climate change, strong regulatory interventions (see, for example, EU CSRD) and rapidly growing stakeholder expectations have moved the onus of winning the climate race to corporate organizations, especially listed and large firms, to act as primary response agents to climate change. Thus, embedding sustainability or ESG related actions into the business models and practices of corporate organizations is being encouraged to be the “business as usual” practice for most enterprises. 

ESG disclosure standards and ESG rating companies 

To help organizations speak the same ESG language in terms of what is measured and how, and for easy interpretation by readers of annual and sustainability reports, the influx of disclosure frameworks and standards, which some have headed for harmonization, has been instrumental in the climate fight. In fact, there may be some complications or complexities in the definitions and measurements of materiality on whether it has to be inside-out, outside-in, or both, or whether it has to be single or double (I think the doubles have it).

However, the response from stakeholders to the framework and standards community has most often than not been very friendly. However, ESG rating companies acting as accountability performance watchdogs to help applaud or shame organizations for stakeholder benefits have been smeared in a lot of controversies lately. Topical amongst these controversies have bothered the methodologies employed by these rating agencies and for example, why Sin Stock companies like Philip Morris International and British American Tobacco will score higher and be deemed more ethical and environmentally friendly than a full electric company like Tesla (don’t debate yet, just let it be).  

Today, the controversies behind ESG ratings, the growing stakeholder confusion and polemics over which rating company is close to accuracy, organizations’ strive for good ESG ratings for investor confidence, ESG linked compensations for top corporate executives, CEO ESG-linked remunerations amongst others, have made the ESG tool for climate change seem feeble. The unbridled will by corporate executives (management) to do everything possible to look good on ESG ratings with others ignoring completely the authenticity of these ratings has now left us with two critical questions to answer. First, who in the corporate governance structure can stir effective ESG dialogue, education and supervisory functions? And second, if ESG ratings smeared in controversies have failed to motivate corporate organisation to improve their ESG performance, then what alternatives will?

The “help button” for agency problems 

The agency theory raises the question about monitoring and control issues that arises from the conflict of interest between executive management and shareholders (Hossain et al., 1995). Within the context of this theory, the fiduciary duties assigned to management by shareholders to maximize the wealth of the latter while acknowledging the interest and power of the former typify the conflicts between these two parties (Barako et al., 2006). Managers, who deal directly with business activity, have a significant information advantage causing information asymmetry, whereas shareholders confront significant moral quandaries because they cannot accurately evaluate managers' decisions (Donnelly and Mulcahy, 2008).

To reduce this tension, including that of information asymmetry, the presence of the board of directors becomes an inevitable unit to diffuse this tension by offering impartial advisory and supervisory functions of monitoring, ensuring transparency, accountability and control to protect the interest of shareholders while doing same for management (Vitolla et al., 2020). These functions of the board of directors via “a social contract” also extends to other stakeholders who have a vested interest in the organization such as employees, customers, regulators, civil society organizations, suppliers and whatnot. 

The board of directors and motivation sources  

From the afore-argued, the board of directors becomes a strategic help button and lifeline to demand and ensure authentic ESG commitments from all and sundry in the organization based on their “expected impartial will” to promote and protect the realization of the “E” and “S” of ESG which answers the first question of our dilemma. Definitely, there should be a motivating factor, which some have alluded to boards’ conscience, independence and mindset to promote responsible business.

While these serve as the bedrock for board effectiveness on ESG decisions, proponents of ESG ratings as a critical motivating factor would have to rethink this approach as some boards are divided on the authenticity of these ratings. A board member of a listed company recently told me and I quote,

“Should we decide to use these ESG ratings as key milestone for our efforts, which do we go with because four different ESG rating firms have four different scores for us. Some scores are up, others are down. And guess what, on the matters of ratings we are always divided as a board”.

While some directors may have an affinity for Bloomberg or S&P based on their methodology, others are vehemently arguing for the adoption of scores from Refinitiv on the same methodology issues. Concerns of data manipulations and the very topical Sin Stock rating effect are making the ESG rating controversy worse, although I must admit that the contribution of these rating firms to the climate change fight cannot be underestimated. Recent research by Scientific Beta revealed that for example,

“ESG ratings have little to no relation to carbon intensity, even when considering only the environmental pillar of these ratings,” (Johnson, 2023). From these, the reliance on ESG ratings as a motivating factor for ESG actions and performance may dwindle, which urgently calls for another strong motivating factor which is devoid of controversy and speaks for itself, viz, the climate migration knowledge effect. 

Climate migration or climate induced migration  

The domino effect of climate change is interconnected. A rise in temperature or sea levels for instance significantly affects food security, water and air quality, health and wellbeing, economic access, and career choices with its accompanying gender issues. In all of these, the immediate impact on climate-exposed victims whose livelihoods, societies and economies are destabilized, creating unlivable conditions, is naturally a force out with the option of climate-induced migration the only way out. Simply engaging one of these victims, especially the young people, whether they are living in developed economies and supporting their families back home, or the squashed aspirations of a new climate immigrant, will reveal the necessity of “Environmental” and “Social” in the ESG bout. This necessity is not the mere going beyond regulatory compliance or meeting stakeholder expectation enthusiasm, but a raw motivation to change the status quo. The picture of the wildfires at Rhodes Island and Corfu last month (June 2023), where you literally see tourists, not dwellers, fleeing for their lives because at least, they have a place they can call home, is the least seen torture climate migrants have fled from. If a board is motivated by such realities of climate induced migration where their guiding principles in pushing for ESG are borne not out of ESG ratings but by the former, the board of directors’ ESG lens projects beyond the short to the long term. Staying far away from the realities of climate change should not in any way make board members less concerns of its rippling effects on all facets of society.

Where to start and how to keep up the pace

Refresher briefings on climate induced migration 

Providing refresher briefings on how climate induced migration knowledge can boost the ESG decision-making process is a good kick-off for the board of directors’ awareness which can be made available through the company secretary’s (CoSec) office and its allied governance personnel. As the board of directors has financial and non-financial issues to discuss on the board agenda, it may seem that adding another topic to the already daunting and time-constrained meeting may be untenable. Sending these briefings as case studies, especially those that are tailored to the organizations’ material issues could be a turning point for ESG thinking at the board level. Depending on the organizational needs, these briefings can be sent out on a monthly or quarterly basis.

Board of directors’ engagement with management 

While the board of directors has a clear understanding of climate migration as a key driver to ESG decision making process at the board level, acting as the change agents from the top, owing to their advisory and supervisory function, can alter management culture, thinking and approach to tackling ESG related concerns for the organization. Thus, motivation for ESG will not come from and be geared towards looking good on ESG rating platforms, but a corporate will to do what is ethically right while staying committed to the course of ESG regardless of what the ratings say.

Corporate townhall employee meetings 

Traditionally, town-hall meetings have been great avenues for both in and out-house engagements for education and knowledge exchange. While this happens in person traditionally, the power of virtual meetings has made congregation easier. Town-hall meetings with employees led by board members who employees may have never seen in person or engaged online with before will be strategic in drumming home the education on how climate induced migration knowledge can be a game-changer in redefining commitment to ESG activities and actions.

Where ESG ratings have failed or may seem controversial in motivating board decisions on ESG, climate migration awareness and knowledge may be the right dose of energy to motivate the board of directors’ ESG decision making thinking and process.


Barako, D. G., Hancock, P., & Izan, H. Y. (2006). Factors influencing voluntary corporate disclosure by Kenyan companies. Corporate Governance: An International Review, 14(2), 107– 125.

Donnelly, R. and Mulcahy, M., (2008) Board structure, ownership, and voluntary disclosure in Ireland. Corporate Governance: An International Review, 16(5), pp.416-429.

Hossain, M., Perera, M.H.B. and Rahman, A.R., (1995) Voluntary disclosure in the annual reports of New Zealand companies. Journal of International Financial Management & Accounting, 6(1), pp.69-87.

Institute for Economics and Peace –IEP (2020) Over one billion people at threat of being displaced by 2050 due to environmental change, conflict and civil unrest. Available at: [Accessed 28/07/2023]

Johnson, S. (2023) Companies with good ESG scores pollute as much as low-rated rivals. Available at: [Accessed 31/07/2023]

McAllister, S. (2023) There could be 1.2 billion climate refugees by 2050. Here’s what you need to know. Available online: [Accessed 31/07/2023]

UNHCR (2016) Frequently asked questions on climate change and disaster displacement. Available online: [Accessed 31/07/2023]

Vitolla, F., Raimo, N. and Rubino, M., (2020) Board characteristics and integrated reporting quality: An agency theory perspective. Corporate Social Responsibility and Environmental Management, 27(2), pp.1152-1163.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Enoch Opare Mintah is a Ph.D. candidate at Kingston University London and an Associate Lecturer of Governance at the University of Lincoln, UK. His research interest and expertise revolve around ESG disclosures, Sustainability Reporting, Corporate Social Responsibility, Education for Sustainable Development, and Citizenship Education.

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