Our recent flash survey of 57 board directors, chairs, senior executives and corporate advisors revealed that they see climate change, AI, equality - diversity & inclusion (DEI), and geopolitics as the top sustainability issues impacting their organisations.
Editor's note: We consider AI and geopolitics to be part of sustainability considerations due to the systemic magnitude of these issues.
When asked to rank these issues in order of importance and challenge to their role, climate change topped the list, with 32% ranking it as the # 1 issue and 25% ranking it # 2. AI and geopolitics followed as the next biggest challenges.
The respondents, which included 61% non-executive directors or chairs, 20% senior executives, as well as 19% corporate advisors like lawyers and consultants clearly feel underprepared to effectively govern on sustainability matters. The areas they are lacking most include:
Data and intelligence on sustainability topics (44%)
Clarity on incoming ESG regulations (40%)
Understanding of how sustainability impacts directors' duties (33%)
Stakeholder governance and engagement frameworks (28%)
Appropriate oversight structures like committee setup and policies (28%)
As one respondent said, "I'm lacking trustworthy data that reveals the impact of our operations and its connection to commercial factors."
Some of the specific challenges mentioned include quantifying scope 3 emissions, addressing the full environmental impacts on clients and supply chains, getting board colleagues to understand the importance of sustainability oversight, securing investment for innovation, setting realistic climate targets, and encountering over-regulation.
The findings suggest that corporate boards have a long way to go to up-skill and equip themselves to govern organisations in an era of heightened sustainability expectations and requirements. They need better data, external expert advise, benchmarks and governance structures to integrate sustainability issues into core oversight responsibilities.
We're currently conducting qualitative interviews with board members to better understand the nuances of their challenges and to inform a more detailed report coming out later this year. Please contact us if you would like to participate.