Creating A Sustainability-Savvy Board
From both a risk and opportunity perspective, boards must ensure they fully engage with the impact of sustainability: Board members are challenged to take bolder and more transformative action. A recent study revealed that nearly 75% of European board directors believe that ignoring sustainability will affect their organisations’ ability to create long-term value. However, only 30% believe that ‘everyone on the board has a good understanding of sustainability and its place in strategy,’ and just over half state that ‘the board sees a solid business case in sustainability’.
In this podcast, Dr Sabine Dembkowski talks with Trista Bridges, Founder of Read the Air, about creating a sustainability-savvy board.
Some of the key takeaways of the conversation include:
“Millenials and others are asking why companies can’t make profits and do better for society”
Trista discusses how many things have changed over the last ten to fifteen years, and how some have felt that this has caused inequality and a strain on the system. She also argues that businesses have in effect been asked to step up into a role that previously might have been filled by governments.
“Companies need to identify what we call “materialities” – This depends on the industry you’re in, sector, country etc.”
Trista acknowledges that sustainability and ESG are both broad topics. She cites the food industry and issues around healthy food as an example, where companies need to look at their product portfolio. She also knows this can be an issue for businesses, for example, Japanese companies looking to attract outside foreign capital may have to look at changing their approach toward ESG issues, in order to bring in outside investors.
“90 percent of investors place more emphasis since the start of the COVID-19 pandemic on ESG performance in terms of how they invest” 1
Trista acknowledges that for older generations these issues were not as prevalent. Recent surveys have shown that a significant number of investors place emphasis on ESG, as do a majority of analysts.
“ESG is not a nice thing to have, it’s a necessity for the company”
Trista believes it is important that boards look at where their priorities are in terms of sustainability and ESG, and whether everyone’s thoughts on these topics line up with each other.
“There needs to be ESG training within board training… …The support has to start at the top”
Trista also stresses the importance of incorporating ESG training into an overall board training program. Another option she provides is the idea of having someone specifically designated on the board to oversee ESG and to potentially educate other members of the board, as well as reaching out to outside experts if necessary.
“If you are serious about something, you resource it”
One example she uses is net-zero targets. Companies may invest in marketing, accounting and so forth but may not put sufficient resources into issues such as making a business more sustainable.
The three top takeaways from our conversation are:
1. Boards need to look at where they are in terms of sustainability. What do they know? What do they not know? How can boards become savvier about this topic?
2. What is material for your company? Understand what is going on in terms of sustainability, ESG and other issues - there are risks but there are also opportunities.
3. Does the company have a strategy in addition to its targets? Companies need to know how they are going to execute their strategy and have accountability in place