Environmental, social and governance (ESG) issues climbed the agendas for boards and media alike in 2021. However, we still have a long way to go in terms of education.
The Global Risks Report 2022, just published by the World Economic Forum, puts this into sharp focus. Based on an analysis of current economic, societal, environmental and technological trends in the Global Risks Perception Survey (GRPS), respondents revealed that societal and environmental risks are the most concerning factors in the next five years.
However, looking forward over 10 years, environmental risks to our planet and its people dominate people’s concerns. “Climate action failure,” “extreme weather,” “biodiversity loss” and “ecosystem collapse” are the top four most severe risks.
ESG has climbed up the agenda for boards, but we still have a long ways to go.
With this in mind, here are my 10 New Year’s resolutions for board directors.
1. Show you care
Care is the currency with greater value than cash to many these days. Companies and board members must show genuine empathy in 2022 and understand pain points and dreams. It’s time to care about your stakeholders in terms of mental health, family matters, personal identity and even the impact supply chain struggles and inflation are having on your customers.
2. Love your vocal critics
Activists, disaffected stakeholders and disgruntled employees may be irritating at times. However, you should heed the passion, time, energy and courage they put in to get their opinion heard. Of course, they are not always right, but you should still respect it — and, it’s free advice.
3. Create trust, not destroy it
The 2021 Edelman Trust Barometer revealed that businesses have a 61 percent trust level globally, ahead of governments, NGOs and media, and of the four groups is the only one seen as both competent and ethical. But beware: Trust is fragile. Trust in the bank enables your company to experiment and take more risks. An overdraft will leave you nothing to build on.
4. See the big picture
Nothing you do as an organization should be seen in isolation. Look at the outcomes and impacts in the short, medium and long term. For example, if you buy an electric vehicle, you might be proud of your contribution to reducing the carbon footprint. But if the mining operation taking metals from the bottom of the sea are releasing copious amounts of CO2, are you causing more damage than you are reducing? Are you part of the solution or the problem?
5. Use the future to help shape the present
You must build robust scenario planning into your company. What will the world look like in 2030 for you? Who are your stakeholders? What will they care about? What will they talk about and where? What will they need? Then go back to the present and use that insight to shape what’s good for your company and your current stakeholders.
6. Know what you do not know
The time for half measures is over. At the risk of sounding like Donald Rumsfeld, forget the known unknowns. Don’t put your head in the sand. Be curious. Think the unthinkable. Don’t procrastinate. Instead, be agile and act accordingly.
7. Trust your data
There is so much data available now, it’s easy to get lost in the numbers. Instead, build processes to get better insights and outcomes. Have the data audited by internal and/or independent external auditors. Set plans, budgets and accountability. Then trust will flow.
8. Be transparent
We are living in an era of accountability and transparency. There really is nowhere to run and no place to hide from your customers, stakeholders, employees and social media. So, don’t tell half your company’s story with just the nice pictures and the cuddly animals. Ensure your company practices what it promises and tie your work to concrete, measurable goals and results.
9. Be competent and courageous
Bring your insight and foresight to the boardroom table. Be prepared to stand by and explain your decision in private and public. Be curious, serious and courageous. In short, be a role model for your company and others around you.
10. Become a Steward of the Future
Buy the book! But seriously, decide your purpose as a company and senior leader. Set out what you want to achieve. Work out your legacy for your children, and theirs to come. The rest will follow.
These are my 10. What are yours? I’d love to hear from you.