Crisis as an ESG Catalyst: COVID-19 and Black Lives Matter bring the "S" into focus for a director of iRobot, Covetrus.

• Author: Ellinger, Deborah
• Position: THE AGE OF RISK: Character & Culture in the Recovery

COVID-19 and Black Lives Matter have brought a harsh spotlight on environmental, social and governance issues (ESG), especially on the many "S" issues boards oversee. Your investors, employees and other stakeholders should know you understand and will react accordingly.

While the pandemic is still wreaking havoc around the world, many slogans have bubbled up, including "Black Lives Matter" and "Defund the Police." I believe it is perhaps more important to become "anti-slogan." Block the noise and the acronyms--instead, listen to your people and do the right thing. Ask management for meaningful employee surveys so that you can understand what your associates need in order to be successful and what concrete actions will help them.

A good starting point is an employee census. Most companies have reports on the percentage of diverse employees at different ranks, but it is important to go at least one level deeper if you want change to happen. Do you know what percentage of the applicant pool is diverse? What percentage of diverse applicants actually get hired? What percentage get promoted? How their pay stacks up? What percentage leave, voluntarily or involuntarily? By watching these types of metrics, you can engage in a much deeper discussion and help be a catalyst for change.

Improvement takes time, but it's easier than you think.

Ten years ago, we used to hear, "I'd love to have a woman on my board, but there aren't any qualified candidates." That has been proved wrong--100% of the S&P 500 company boards include women, and 26% of their board seats are held by women (as are 20% of Russell 3000 board seats). These percentages continue to increase, and there has been no reduction in board quality. Research shows that boards with women have better overall financial performance. This change in participation was achieved by expanding the recruitment network beyond "the people I already know." Boards also stopped focusing only on former CEOs and C-suite executives, and instead sought skills like digital expertise, financial depth, leadership and global outlook. Could this approach help us with the next board milestone: ethnic diversity? To find accomplished women of color for board seats--and there are likely more than you think--the key is to expand the networks you tap and look for skills and potential instead of current status.

Focusing on social issues will improve employee retention during and after crises.

With partial or full work-from-home...