A firm improving board independence is addressing which ESG pillar?

Question

BlackTom AI · Accepted Answer

To approach this question, I will examine what each ESG pillar typically covers and how board independence fits into that framework.
Option a: Social. The social pillar deals with human capital, labor practices, stakeholder engagement, community impact, and rights. While board composition can influence social outcomes, independence is not primarily a social-domain focus; this option is not the best fit for governance-centered governance matters.
Option b: Governance. The governance pillar encompasses structures and processes for corporate oversight, including board independence, board committees, executive compensation, risk management, and accountability. Improving board independence directly strengthens governance by reducing conflicts of interest and enhancing oversight, making this the most appropriate choice.
Option c: Environmental. The environmental pillar covers a company’s environmental impact, resource use, emissions, waste, and climate-related performance. Board independence does not directly address environmental metrics, so this option is incorrect.
Option d: Financial. The financial pillar relates to financial performance, reporting, capital structure, and investor relations. While governance can influence financial outcomes, independence of the board is not classified under the financial pillar itself; this choice is not aligned with the standard ESG categorization.
In summary, the improvement of board independence aligns most closely with governance practices and structures, rather than social, environmental, or financial domains. The governance pillar is the framework that explicitly focuses on how the organization is directed and controlled, including the composition and independence of the board.

BFC3999 - BFF3999 - S2 2025 Mock ESG Test

A firm improving board independence is addressing which ESG pillar?

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