Corporate boards raise concerning knowledge gaps when it comes to sustainability, new global research finds - Seite 2

This tension between the importance of sustainability, and the time and effort required to consistently give it the attention needed to prioritize it is a persistent theme, according to the report. Although a significant majority (79%) of board members surveyed said their board had a very clear understanding of the strategic opportunities and risks sustainability presents, only 29% completely agreed they had sufficient knowledge to effectively challenge management on sustainability plans and ambitions and exercise oversight on their execution.

The survey highlights that these challenges are a global phenomenon, with very few differences evident across regions and sectors, despite very different traditions of corporate governance and responsibility.

"The job of the board today is more challenging than in recent history.  Against the backdrop of economic uncertainty, rising social activism, and critical climate targets that are slipping from reach, boards require a new breadth of expertise that far extends beyond the traditional, operational, and financial health of a business," said Alice Breeden, Co-Leader of the European CEO & Board at Heidrick & Struggles. "If progress on sustainability is to improve, it is clear that further education, broader director diversity, and greater prioritization of ESG in the boardroom must be standardized to meet the challenges of the current environment."

Stakeholder pressure motivating action 

Directors cited increasing expectations from capital providers including investors and the importance of sustainability in attracting and retaining talent as major motivators of action. A smaller share—about one-quarter—see a longer-term financial risk from not integrating sustainability into the business: 10% expect a negative impact on medium to long term financial results and 13% see a threat to survival in the medium to long term.

"Today, organizations, including their boards, are completely occupied with the upcoming legislative and reporting requirements. Action on sustainability is mostly driven by stakeholder pressure. This triggers risk averse and defensive behavior, leading to organizations that only do the bare minimum," said Ron Soonieus, a Senior Advisor at BCG, a Director in Residence at INSEAD, and a coauthor of the report. "While the new rules and regulations serve a clear purpose, compliance does not guarantee the long-term success of the company. Boards struggle to see that, and a fair share believe that if they comply, sustainability is covered. Only 34% of respondents say they have a clear understanding of how long-term trends impact the future value of the company. Boards have a key role to play in ensuring sufficient weight is put on making sustainability an integral part of the long-term strategy, and to start seeing it as a source of competitive advantage."