Addressing climate change takes corporate leadership. Companies have to figure out decarbonization – whether they are aiming for carbon neutral, net carbon zero or carbon negative.
Research from Heidrick & Struggles and The Corporate Governance Centre in their Changing the Climate in the Boardroom report shows that “74% of respondents agreed that the issue of climate change was very or entirely important to the strategic success of their companies”. Key drivers are pushing organisations to prioritise climate change, from investors to internal employees to customers (see the graph below).
So why are organisations not doing more?
The report suggests that there is a disconnect between what board members of organisations SAY and what they DO. The report identified some key issues underlying the lack of action and change within organisations:
- “16% of companies said that no one is responsible for reporting on climate change to the board
- 85% of respondents said that their boards need to increase their climate change knowledge (CCK)
- 69% said that CCK is not a requirement for joining the board
- 65% said that CCK is not a formal requirement for CEO selection
- 40-50% of directors do not know enough about the various implications of climate change”
Overall this relates to the vicious circle that boards seem to be stuck in:
Practical climate-related recommendations
The report offers some recommendations on how to break the vicious circle, based on successful, real-life practice:
- Putting climate change in the competency matrix used to assess board members. This would require board members to upskill themselves on CCK and its implications for their company.
- To add more voices into the boardroom, to give opportunities to a wider range of individuals.
- To anchor climate change strategy in your company/organisation’s purpose.
- To have specific climate change objectives integrated into the CEO’s role.
Overall, to achieve decarbonization throughout different industries and meet COP26 targets, we need to fill the knowledge gaps, create action and have more integration and planning from boards.