How Boards Can Lead the Fight Against Climate Change
- Boards of directors are naturally positioned to help companies prioritize climate action.
- Boards take a long-term view and hold management accountable for achieving goals.
- Advice can foster collaboration.
“A code red for humanity.”
This is how UN Secretary General António Guterres describe recent climate projections from the Intergovernmental Panel on Climate Change (IPCC). The report was released during a summer that bring historic and deadly floods in Western Europe and China, uncontrollable fires in the Mediterranean and the western United States, and heat in the Pacific Northwest of the United States therefore extreme he melted cables and warped roads. The report predicts that such disasters will soon be much more common – and much more severe.
Yet despite countless warnings and reports, we still do not see the kind of decisive action needed to tackle this crisis.
While COVID-induced lockdowns initially brought unexpected environmental effects advantages, nearly two-thirds of executives in Deloitte Global’s 2021 climate survey reported the pandemic and the resulting economic downturn caused them to scale back their organization’s sustainability efforts. At a time when sustainable development actions must accelerate considerably, many organizations have been forced to take a step back. At the same time, efforts have been curtailed, with more than a quarter of executives surveyed indicating that their organizations are already feeling the operational impacts of climate change.
Businesses need to prioritize climate change risks – and boards are well positioned to help lead the charge.
Why is that? Well, dealing with climate change requires three important things:
- Think long term in a world dominated by short term pressures.
- Greater confidence in institutions that can drive large-scale change – at a time when this confidence is said to be record high low.
- Unprecedented global collaboration.
Big challenges, all of them, but precisely the areas where boards have the power to help companies excel.
Take a long-term view
Humans naturally tend not to think long term, and current business practices can exacerbate this tendency. While the next quarterly earnings report is perpetually around the corner, it’s understandable that the next quarter century could easily disappear from an executive’s attention.
Boards, however, are responsible for taking a longer-term view: understanding future risks and opportunities and ensuring that the organization’s current strategy sets it up for long-term success. And as boards of directors look to the future, there is now a consensus that climate change poses a serious threat to all businesses – from natural disasters disrupting operations to scarcity of resources and loss of life. loss of biodiversity threatening supply chains. The companies likely to be the most resilient in this uncertain future will be those that act now to embed sustainability into all aspects of their operations.
It is the responsibility of boards of directors to help shape this long-term strategic vision and oversee the roadmap of actions management will take in the short term to achieve it.
Building trust and responsibility
Of course, boards have the ability to help set this roadmap and hold management accountable for its implementation.
Currently, climate misinformation and greenwashing incidents have led to skepticism about whether companies are engaged in climate action. Boards can play an important role in helping their organizations take actions that restore grassroots trust with key stakeholders.
It starts by helping ensure that business leaders and their employees have a universal base of climate change knowledge to understand the real impact of their organization’s actions on the planet as well as the actions they can all take. take to reduce their carbon footprint.
Business leaders in mining, metallurgy and manufacturing are changing their approach to integrate climate considerations into complex supply chains.
The Forum’s Mining and Metals Blockchain initiative, created to accelerate an industrial solution for supply chain visibility and environmental, social and corporate governance (ESG) requirements, has released a unique proof of concept to trace emissions throughout the value chain using distributed ledger technology.
Developed in collaboration with industry experts, it not only tests the technological feasibility of the solution, but also explores the complexities of supply chain dynamics and defines the requirements for future use of data.
In doing so, the proof of concept responds to stakeholder demands to create visibility and accountability “from mine to market”.
The World Economic Forum Mining and Metals community is a high-level peer group dedicated to ensuring the long-term sustainability of their industry and society. Find out more about their work and how to reach them, via our Impact Story.
At Deloitte, we recently deployed a climate learning program for all 345,000+ Deloitte professionals as part of our WorldWeather strategy to empower and inspire our employees to act for the climate. Already, we’ve seen that building this foundation of shared understanding has led to more productive conversations, stronger climate leadership, and more sustainable choices.
Board members who oversee climate strategy for entire companies require an even more sophisticated level of understanding. Chairs will need to ensure that board members have the knowledge and skills to ask management the right questions about sustainability progress, and push them to report in a clear, consistent manner. and complete.
It’s not an easy task, but luckily they won’t have to do it on their own.
Any serious effort to tackle global climate change will require, as former Unilever CEO Paul Polman puts it, “radical collaboration”- leaders who come together to share best practices, inspire greater commitments and work together to address the climate challenges we face.
Board members are naturally placed to help lead these efforts. And the good news is that they are already taking action. For example, the World Economic Forum’s Climate Governance Initiative, a growing community of non-executive directors with chapters in more than 20 countries, helps educate, engage and equip boards of directors with the tools they need. to drive their organizations towards a net zero carbon economy. .
Even industry competitors are turning to collaboration to seek lasting solutions. Earlier this year, Deloitte joined more than 60 business leaders, including leading competitors, at the World Economic Forum to develop and commit to a comprehensive and systemic ESG reporting solution. These measures will give stakeholders, suppliers and shareholders a common language as they work together towards sustainability goals.
The fight against climate change is becoming one of the greatest trials humanity has ever faced. Yet short-termism, mistrust, and segmentation have been challenges organizations have faced for years – and boards were specifically designed to help solve them.
Boards and their Chairs have the power and responsibility to guide us through this time of trial – and to leave a legacy worthy of being inherited.