The recognition that businesses — and boardrooms — must take the lead on ESG and climate change continues to gather pace. Recruiters and search firms that place or keep candidates on boards are the latest group to put their weight on the accelerator, insisting that being informed and educated on climate change be a key factor in selection.
Chapter Zero, the UK arm of the Climate Governance Initiative, is at the forefront of this movement. It recently signed a declaration with 12 leading international search firms to address this critical task.
Here, for simplicity, is the search firms’ joint declaration in full:
This group of search firms:
1. Undertakes to continue to raise the issues of sustainability and specifically the board’s climate change capabilities with every board client and candidate. This includes the wider environmental and social issues or implications.
2. Will assess every chair and non-executive director candidate for their competence on climate change issues, applying the following criteria:
- A general understanding of the science around global warming, the current international and national debate and evolving stakeholder expectations;
- An understanding of and literacy around the climate-related risks facing the businesses with which they are currently involved and what those businesses are doing in concrete terms to mitigate those risks and make progress towards net zero; and
- A clear willingness to engage actively.
3. Will participate in a regular/annual feedback and review process to assess how the commitment is being acted upon and the impact it is having in the market.
4. Will ensure that our consultants and teams who are involved in board appointments understand the role and obligations of company directors in tackling climate change and the capabilities required.
This comes alongside a recent survey by INSEAD Corporate Governance Centre and Heidrick & Struggles. Changing the Climate in the Boardroom examines how boards understand and deal with climate change and how far it has been integrated into their oversight responsibilities.
There is still a huge education gap. Just under seven out of 10 respondents (69%) said that climate change knowledge was not a requirement to join their boards. On the plus side, three-quarters (75%) did recognize that climate change was very or entirely important to their company’s strategic success.
The data points stack up:
- 85% said their board needs to increase its climate knowledge
- 46% acknowledged their boards had no or insufficient knowledge of the impacts of climate change on financial performance
- 49% reported that climate change is not, or only slightly reported, in investment decisions
The risks are clear. The opportunity for climate education and positive change are self-evident. It’s time for action.
Mathew Loup is Competent Boards’ Director, Marketing & Communications. Connect with him on LinkedIn.
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