This a model set of Terms of Reference for a sustainability or ESG committee.
Such a committee is not a requirement, but there are increasing numbers of them. This guidance note sets out how to ensure this committee adopts good practice in accordance with other committee recommendations under the UK Corporate Governance Code.
There is a wide range of activities which sustainability or ESG committees can oversee, and the name chosen for the committee can have implications for what is covered in its remit. These model terms of reference are intended as a good practice guide for companies to adapt to their own needs.
These terms of reference allow companies to:
- Base the committee’s activity and scope on good practice, as informed by a wide variety of organisations including some of the UK’s largest listed companies
- Tailor the committee’s role to the business needs and context of each company, because the most relevant and material ESG issues vary by company type and sector
- Be forward-facing and flexible, to encompass changing regulatory, investor and stakeholder demands
- Clearly set out and define the committee’s remit, in particular by highlighting certain areas which may overlap with the remits of other committees
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