
Environmental, Social, and Governance (ESG) considerations have transitioned from being a "nice-to-have" to a critical strategic imperative. For Caribbean boardrooms tasked with steering their organisations through climate risks, shifting stakeholder expectations, and an increasingly interconnected global economy, incorporating sustainable practices into good governance is no longer optional.
The Caribbean Corporate Governance Pulse Survey 2024 and the Caribbean CEO Survey 2025 revealed that while progress is underway, there remains a significant gap between intentions and meaningful action. This article explores the current state of ESG integration in the region’s governance landscape, the opportunities it presents, and actionable steps boardrooms need to take.
Why ESG Matters Now More Than Ever
Caribbean countries, classified as Small Island Developing States (SIDS) are becoming more widely known as Large Ocean States, face unique vulnerabilities. Frequent hurricanes, rising sea levels and floods showcase the harsh realities of the climate crisis. The region has contributed relatively little to the causes of climate change, but we fully bear the brunt of the impact. Meanwhile, societal demands for inclusiveness and diverse representation grow louder in our close-knit Caribbean societies.
To remain viable, Caribbean organisations must lead by example, embedding ESG into their strategies. CEOs and boards of directors should view ESG not as a regulatory burden, but as a driver of operational excellence, customer trust, competitive differentiation, and investor confidence.
The Disconnect Between Perception and Action
Findings from our Caribbean Corporate Governance Pulse Survey 2024 reveal a worrying gap between recognising ESG’s importance and acting on it:
- 56% of respondents incorporate ESG into their strategies to some extent;
- However, less than 10% strongly agree that ESG is regularly on the board’s agenda or that defined processes for ESG oversight exist;
- Over 40% of respondents disclose little to no information about their ESG measures.
This disparity reflects a broader challenge. Caribbean boards acknowledge the strategic importance of ESG—in areas ranging from resource scarcity to climate change—yet often struggle to transition from aspiration to action.
ESG as a Competitive Advantage
Rather than treating ESG as a check-the-box exercise, forward-thinking organisations in the Caribbean are seizing the opportunity to create long-term value. Here's how ESG contributes to competitive advantage:
- Attracting Investors: Transparent ESG reporting can bolster investor confidence, particularly as global markets prioritise green and socially responsible organisations;
- Enhancing Stakeholder Trust: Consumers and employees increasingly favour businesses that align with their values, such as diversity and environmental responsibility;
- Mitigating Risks: ESG can help organisations anticipate and respond to systemic risks, particularly those tied to climate change and resource scarcity;
- Driving Innovation: Embedding ESG fosters innovation by encouraging sustainable processes, supply chains, and business models.
The Role of Good Governance in ESG
Governance is the “G” in ESG that knits the environmental and social components into a robust framework. Strong governance ensures that ESG objectives are not only articulated but also institutionalised. There are a few ways that Caribbean organisations can strengthen governance to support ESG goals:
1. Make ESG Central to Boardroom Discussions
ESG must occupy equal priority alongside traditional measures of organisational performance, such as sales and financial returns. To this end:
- Schedule ESG as a dedicated agenda item in board meetings.
- Establish specific oversight committees focused on sustainability.
2. Align ESG Metrics with Executive Compensation
Currently, 42% of regional CEOs report linking sustainability objectives to executive compensation. Expanding this practice can drive accountability and meaningful action across leadership teams.
3. Leverage the New IFRS Sustainability Standards
The adoption of IFRS S1 and S2 disclosure standards represents a local and global opportunity for Caribbean organisations to demonstrate sustainability leadership. Boards should take a proactive stance, using these frameworks to measure, monitor, and manage environmental performance.