The Character of the Corporation: A deep dive into our forum's biggest questions.

• Author: Tahmincioglu, Eve

As most board members know, environmental, social and governance issues (ESG) are all the rage, with institutional investors putting pressure on public companies to think beyond maximizing value for shareholders by adding a focus on the impact of the corporation on its other stakeholders --including employees, customers and communities. But what does that really mean, and how can it be measured, much less sustained? Ultimately, does this ask boards for some thing that they can't possibly deliver?

To provide some answers to these questions, Directors & Boards convened a forum in November to bring together board members from public and large private companies, along with select corporate governance thought leaders, to discuss the implications of ESG for board members. The forum was designed to be a working event, with all participants contributing to the key takeaways we present in this section.

The forum was built around the following key questions:

* Should a corporation have a social purpose? What is a corporation's broader responsibility to society, if any?

* What is ESG (or corporate social responsibility)? Does it emphasize the E, or the S, or the G? Is "ESG" even the right term?

* How can ESG initiatives be measured?

* Should management be compensated and incented on ESG performance?

* What is the impact of ESG on culture, employee retention and recruiting?

* What is the role of institutional investors in shifting focus away from short-term performance towards long-term goals?

* Will ESG need government intervention to ensure compliance?

* How should boards monitor and report their ESG initiatives?

Key notes and takeaways were kept live during each session and are presented in edited form here. These takeaways were summarized and organized during a working lunch and are presented in Robert Rock's introductory piece to this section, where he focused the findings on what a chair or lead director can bring up at the next board meeting.

Here, we go into additional detail for some of the questions our participants found most important.

Should a corporation have a social purpose?

"Purpose" does not need a modifier like "social." Purpose is how the company is operated. "Social" confuses things and makes it sound like corporate America is trying to solve the world's problems. But a clear disclosure of purpose is key, since the next generation of employees and customers care a lot about this.

Great companies have always thought about ESG, but...