How can company boards lead the sustainability transition?

The webinar discussed how company boards can lead the sustainability transition by focusing on effective governance, strategic leadership, transparency, and the importance of expertise in sustainability. 

The speakers emphasised the need for education, courage, and a balance between short-term goals and long-term sustainability. They highlighted the need for Boards to assess their composition and processes to ensure they have the necessary skills for sustainable decision-making.

You can watch the recording here, and read the key highlights below.

Some key highlights include:

Urgency of Action on Climate Change

• Urgent collective action at all levels is necessary, given climate change's severe impacts on lives, economies, and the environment.

Increasing Corporate Focus on Sustainability

• Companies are increasingly focusing on sustainability, in part due to new regulations, but not exclusively. Companies in sensitive sectors are more experienced than those in less sensitive sectors.

Board Responsibilities for Sustainability

• Boards must act on sustainability for business continuity. Increasing climate litigation is bringing increased attention, but the real need is for sustainable value creation and business transformation.

• Boards need awareness, expertise, and courage to advance sustainability. Different models exist for integrating sustainability into board decision-making, depending on company maturity and sector.

• Sustainability expertise is crucial for boards to link reporting requirements with business model transformation. 

Governance and Leadership for Transformation

• Reporting alone won't drive transformation. Corporate governance and strategic leadership are crucial for sustainable value creation.

Role of Internal Auditors 

• Internal auditors have dual roles in ESG journey, aiding in awareness creation and monitoring implementation.

Courage in Corporate Governance

• Courage in corporate governance is defined as the ability to speak up, resist group thinking, challenge management, and share views - as defined by the Belgian Corporate Governance Code. 

• Currently, boards lack courage in asking necessary questions on sustainability and challenging business models.

• Courage involves challenging business models, understanding real value, and transforming current practices for sustainability. 

• Board members lack courage and knowledge to address sustainability challenges effectively. This is hindering progress and necessitating education and upskilling to enhance understanding and drive action.

Education and Upskilling of Board Members

• Education and upskilling of board members are essential to overcome barriers and ensure a general understanding of the impact of climate change on business strategy.

• All board members should engage in ongoing education programs to understand the impacts of climate change on the business and society.

Utilisation of External Consultants

• Board members need sufficient expertise and awareness to challenge management effectively, necessitating external consultants if expertise is lacking.

• Boards require training on technical sustainability elements specific to their sector. External consultants can help set up strategies, but real understanding and implementation must be internal.

• External consultants can assist in structuring strategies and processes, but the real understanding and implementation must be within the company.

Strategic Dilemmas and Policy Making

• Effective risk portrayal, scenario planning, and communication are crucial for engaging the investment community. 

• Balancing short and long-term goals is a strategic dilemma, while policy makers play a key role in creating a level playing field.

• At the board level, defining the purpose of the company and sticking to it can aid in resolving conflicting interests.

• Policy makers need to provide a clear regulatory framework and demonstrate boldness and consistency to drive innovation and entrepreneurship. 

Double Materiality Reporting

• Double materiality reporting helps companies assess both internal and external impacts for sustainable decision-making.

• Double materiality analysis informs reporting and board insights on risks, opportunities, and impacts, emphasising practicality and integration into business strategies.