There is never a dull moment in the board room. The world is changing at an incredible pace and in the midst of the pandemic, global executives are ranking climate change the most serious societal threat to their business over the next decade according to Deloitte, the WEF Risk Report and many other sources.
Mr. Fink, the CEO of Blackrock, has recently said that: “In March, the conventional wisdom was that the crisis divert attention from climate. But just the opposite took place, and the reallocation of capital accelerated even faster than I anticipated”. Investors in mutual funds and exchange traded funds poured 288 bn USD into sustainable assets between January and November last year, Mr. Fink said, which is nearly double the sum for all 2019. And according to the Blackrock CEO, there is no company whose business model won’t be profoundly affected by the transition to a net zero economy.
Clearly, sustainable business – and as part of that climate action – has become a deeply strategic business issue that needs the attention of the Board. But are Board Directors prepared for these discussions? According to a new study from New York University’s Stern Center for Sustainable Business, only 3% of the 1,188 board directors in the 100 largest US companies had climate expertise, whereas 6% had broader ESG experience. Let’s hope that these numbers look better in the Nordic region. But at a time of ballooning investor demand for climate action and important investments on the table to reach Net Zero emission targets in many board rooms, this is the time to ensure that you are a climate competent board member. According to the Global Board Survey 2020 from Intersearch, increased sustainability/purpose focus is the number one trend to impact the board and the corporate governance agenda in the coming year.
There is plenty of inspiration to tap into, such as the World Economic Forum’s “Principles for Climate Governance”, the UN Global Compact’s “Business Ambition for 1,5 C” or the “Science Based Targets Initiative”. All of this, we will draw on at the new Board Impact Forum which is the Nordic chapter of the Climate Governance Initiative in collaboration with the World Economic Forum.
This is, indeed, the time to become climate and ESG competent.
NED, former CEO UN Global Compact and Senior Advisory Board member at the Board Impact Forum.