New year, same pattern of extreme weather events. After much of the northern hemisphere was blasted by winter storms, a freakish spell of warm weather (shirt sleeves in New York, 25C in parts of Spain and many European ski runs closed in peak season) has been yet another sharp reminder that climate change is becoming dangerously well established.

New research by the American Meteorological Society definitively connects these events to climate change. The UN Intergovernmental Panel on Climate Change (IPCC) has also warned that these weather extremes are likely to continue, if not worsen. This will have far-reaching environmental, social and governance (ESG) impacts on businesses the world over in the short, medium and long term, so companies must move fast to get informed today and make the right decisions for tomorrow.

As a board director or senior business leader, your best decision in 2023 would be to register for one of our world-class ESG and Climate education programs to better understand these challenges.

As always, please keep your news tips and suggestions coming to or join the conversation on LinkedIn when we post this weekly digest. 

1. Rating risks around the world. In advance of its annual meeting in Davos, Switzerland, the World Economic Forum (WEF) has published its Global Risks Report 2023. Set against a backdrop of rising inflation, widespread social unrest, various theatres of geopolitical tension and possible nuclear war, WEF has identified a top 5 for the next two years:

  1. Cost of living crisis
  2. Natural disasters and extreme weather events
  3. Geoeconomic confrontation
  4. Failure to mitigate climate change
  5. Erosion of social cohesion and societal politicization

The report also take a longer look into the future, and its top 5 five risks for the upcoming 10 years reflect the rapidly rising visible importance of the E in ESG:

  1. Failure to mitigate climate change
  2. Failure of climate-change adaptation
  3. Natural disasters and extreme weather events
  4. Biodiversity loss and ecosystem collapse
  5. Large scale involuntary migration

“The short-term risk landscape is dominated by energy, food, debt and disasters,” said Saadia Zahidi, Managing Director, World Economic Forum, in a news release. “Those that are already the most vulnerable are suffering — and in the face of multiple crises, those who qualify as vulnerable are rapidly expanding, in rich and poor countries alike. Climate and human development must be at the core of concerns of global leaders, even as they battle current crises. Cooperation is the only way forward.”

2. SEC countdown underway. The US Securities and Exchange Commission (SEC) has revealed that it plans to finally release its climate disclosure rules by April. These much anticipated regulations will require that companies disclose how climate change is impacting them and their greenhouse-gas emissions. There is an expectation that larger companies will also have to reveal their Scope 3 emissions in their supply chains. This requirement has drawn criticism from Republicans and the American agriculture industry.

3. Climate risks and strategies. The Institute of Management Accountants (IMA) has published a green paper that takes a close look at how chief financial officers and their accounting teams in the US address climate change-related business risks and opportunities. Just under a third (32%) of those surveyed 32% reported that their company does not have climate change in its enterprise risk management, with only 7% saying there was a dedicated climate risk management process. About one in four reported that their board had an established committee or subcommittee with oversight responsibility for ESG risks. In general, IMA found that CFOs and CEOs had a shorter-term focus on risk analysis than investors, which creates a “significant challenge that requires attention to implementing strategies and reporting around climate issues”.

4. India powers up. The Indian government formally signed off last week on its National Green Hydrogen Mission, with a goal of making the country a global hub for manufacturing this cleaner fuel. India plans to produce five million tonnes per year and generate a further US$100 billion in investment by 2030. At the same time, India aims to lower its dependence on fossil fuels and expand Indigenous manufacturing capabilities. Green hydrogen is increasingly being seen around the world as one of the keys to a net zero future. India had already committed to cutting emissions intensity by 45% by 2030, as well as having half its electric power from non-fossil fuels.

5. Risk perspectives for 2023 and beyond. A new survey by Protiviti of executives and board directors around the world identifies 2023 as the most perilous year in prospect for more than a decade. Geopolitical, macroeconomic, rising inflation, cybersecurity threats, disrupted supply chains and the competition for talent are just some of the risks identified. In terms of ESG, respondents identified two specific areas:

  • The growing focus on climate change and related ESG policies, regulations and increasing disclosure requirements, as well as stakeholders’ expectations about “green” initiatives, supply chain transparency and other governance and sustainability issues may force companies to significantly alter strategies and business models in challenging ways
  • Potential performance shortfalls (including lack of progress on ESG goals or expectations) may trigger activist shareholders who seek significant changes to their companies’ strategic plans and vision

Protiviti surveyed more than 1,300 board directors and senior executives around the world for its 11th annual survey. 

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.

Back To News & Views