Written by Dr. Donna Hamlin, Advantary Partner, Board Governance Expert

Sustainability is a focus for boards as pressure from investors, lawmakers, regulators, governments, employees and customers weigh in with questions of companies today.

Is your board doing enough to set up your company for long-term success in a sustainably-minded environment?

From regulators in Europe to the SEC in the US, global governments are actively proposing new reporting standards for disclosure on sustainability topics.

A 2022 study by Russell Reynolds Associates cites that 65% of board directors say there is a genuine commitment to make real progress and invest time and money to reach goals. Yet, while commitments to ready Net Zero targets, 68% of boards surveyed have not set a Net Zero target date, 13% say they don't expect they will, while 5% who have set goals think they won't reach their targets.

Where Does This Fit On the Board?

Currently, investors clearly say sustainability and climate risk in the full board's responsibility. It is insufficient to have an "ESG director" or "Sustainability Director. The growing expectation is for the full board to improve the current low level of sustainability expertise and understanding to their work in identifying risks and new way opportunities for creating value.

Corporate governance analysts report a low level of director qualifications or relevant experience on major boards today. A recent Harvard survey of Nomination and Governance committee chairs shows 63% now include this as a critical leadership competency for prospective directors.

Boards will need to strengthen their competency and will build capable management teams for their ability to manage sustainability well.

What Board Directors Should Consider

If your board is in an early stage on this topic, here are five key areas to explore.

1. How vital is ESG to our business? -- Why are we doing it? What timeline makes sense? What will we measure?

2. How should our board oversee, enable and support ESG results?

3. How should we ensure leadership, talent and skills are in place to manage the plan and results?

4. How do we assess operations to deliver on goals and results?

5. How do we create a work culture that engages all to reach our goals?

For more on Board Governance join Dr. Donna Hamlin on October 11th from 8:00-9:00 am PT for a complimentary workshop. More details and RSVP here.