7 trends impacting Sustainability in the Boardroom

7 trends impacting Sustainability in the Boardroom

The current status of sustainability in corporate boardrooms across the world varies depending on the region, industry, and individual company. There are some common trends and developments highlighting the growing importance of sustainability in boardroom discussions. 

1. Increased Recognition of ESG Factors

Environmental, social, and governance (ESG) factors are increasingly recognized as a competitive advantage and critical drivers of long-term business success. Corporate boards are paying more attention to these factors and integrating them into strategic decision-making processes to drive long-term value creation and resilience.

2. Regulatory and Reporting Requirements

Many countries have implemented or are considering regulations requiring companies to disclose ESG-related information. This includes mandatory reporting on issues such as carbon emissions, diversity, human rights, and supply chain sustainability. Corporate boards are responding to these requirements by ensuring compliance and adopting robust reporting practices. Leading organizations in sustainability matters are often ahead of regulatory requirements, for example, voluntary reporting on ethnicity pay gap.

3. Investor Pressure and Shareholder Activism

Institutional investors and shareholders are placing greater emphasis on sustainability performance when making investment decisions and engaging with companies. Shareholder activism on ESG issues is also on the rise, prompting corporate boards to address sustainability concerns to maintain investor trust and shareholder value.

4. Board Diversity

Boards with diverse composition, are better equipped to oversee and guide sustainability initiatives. In particular, gender diversity has attracted a lot of attention as women remain underrepresented with only 16% female board members in the top 500 multinationals, according to a 2020 OECD survey. In the UK, Women on Boards UK works with women and organisations to improve these metrics through a dedicated job board, training and events.

5. Skills in the Boardroom

Companies are actively seeking directors with ESG expertise to strengthen board oversight of sustainability issues. The Sustainability Board recently launched the Sustainability Leadership Preparedness Programme (SLPP) to equip board members on ESG matters.

6. Stakeholder Engagement

Corporate boards are engaging with a broader range of stakeholders, including employees, customers, suppliers, and communities, to understand their sustainability priorities and concerns. This engagement informs boardroom discussions and helps companies address stakeholder expectations more effectively.

7. Innovation and Technology

Innovation and technology play a crucial role in advancing sustainability goals. Corporate boards are exploring innovative solutions and technologies as well as the use of AI to drive operational efficiencies, reduce environmental impact, and create sustainable products and services.

Overall, sustainability has become a core consideration in corporate boardrooms worldwide, driven by regulatory requirements, investor pressure, stakeholder expectations, and a growing recognition of the business imperative for sustainable practices. While progress varies across industries and companies, the trend towards greater integration of sustainability into corporate governance is expected to continue in the coming years.

By Cristina Galindo, Director of International Development

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