FOCUS ON SUSTAINABILITY FALLING SHORT OF BOARD DIRECTORS’ RADAR
SCHOOL: Insead COUNTRY: France
You might assume that, by now, the sustainability agenda would have infiltrated every part of an organisation from top to bottom. But new research from Insead suggests that there is still work to do at board level. In the research’s global survey of board directors, only half of boards reported that they looked for knowledge or experience with sustainability when selecting fellow board members. Furthermore, only 29 per cent of board members felt knowledgeable enough to challenge or monitor the sustainability of organisations under their direction. Compounding this is a notable shortfall in the importance of sustainability issues. Most board directors (68 per cent) feel that sustainability has little impact on financial performance and only 10 per cent believe that it will negatively affect medium to long-term financial results. Where there is a motivation to act sustainably, it comes because board members think it is the right thing to
do (52 cited by per cent) or simply because of legislative requirements (51 per cent). The report is the work of the Insead Corporate Governance Centre in partnership with Heidrick & Struggles and the Boston Consulting Group (BCG). “Today, organisations, including their boards, are completely occupied with the upcoming legislative and reporting requirements. Action on sustainability is mostly driven by stakeholder pressure. This triggers risk-averse and defensive behaviour, leading to organisations that only do the bare minimum,” said Ron Soonieus, a BCG senior advisor, director in residence at Insead and a co-author of the report. Executive director of the Insead Corporate Governance Centre Sonia Tatar added: “More than ever, the weighted responsibility on boards is pointing to the imperative for targeted education to bridge the knowledge gaps which are fundamental in driving governance transformation.” EB
10 | Ambition | SEPTEMBER 2023
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