The Corporate Agenda – Sustainability on Board?
In a recent survey to CEOs representing 46% of the world’s geographies, CEOs showed optimism regarding economic recovery. Yet, they also showed concern over its robustness citing cybercrime and health risks as their top priorities for 2022.
In spite of the 2021 economic impacts of Climate Change across the world and increased pledges on Carbon Neutrality and Net-Zero, this global challenge isn’t on many CEOs’ corporate agenda. In 2021 heavy rains destroyed infrastructures in Germany, China and India, to name a few. Consequently, energy supply was severely disrupted, contributing to prices surge. Recently, more investment has been announced on new infrastructures to strengthen energy systems robustness and reliability. During COP26 more pledges were announced. By its last day, a total of 5,545 companies had pledged for Net-Zero in multiple initiatives as the UN’s Race to Zero initiative, the Global Coal to Clean Energy Transition statement, the GFANZ (Glasgow Financial Alliance for Net Zero). Yet, Climate Change isn’t on the top of their priorities.
This survey also found that companies with higher levels of trust from their customers tend to make bolder sustainability commitments, driving change and receiving higher levels of satisfaction. Those companies have lower gender gaps, too.
As more companies realised Climate Change is a joint effort whose risks will be better mitigated with more companies tackling the challenge materially, actions increased. Knowing a company is responsibly managing its assets and values so across its value chain, stakeholders’ level of trust in that management team increases. For example, boards get support from its shareholders. On the opposite side, as greenwashing cases were uncovered, customers who felt misled opted for sustainable solutions and employees left. Companies’ reputation dropped, too, as I could gather in a Corporate Governance research, I conducted in 2020. The increasingly number of pledges, the sustainable initiatives and commitments taken, show companies are becoming more aware of the need to operate sustainably. Doing so strategically, can help the company improve its balance sheet along with positioning among its stakeholders.
As of 30th of January 2022, some of the pledges signed at COP26 have expanded to:
- 34% of the 2,000 largest publicly traded companies
- 5,227 companies signed the UN race to zero
totalling 6,380 the number of companies with pledges. However, the lack of common standards, methodologies, reporting and tracking systems make the impact of those pledges difficult to assess decreasing the certainty on how many degrees global warming will be limited by 2050. This misalignment also hampers investors and lenders’ ability to compare and make decisions. How about increasing the usage of corporate power as a force for good on the Planet, People and Profits? Reach out, I am available to help your organisation on that.