Is being ‘a responsible business’ incompatible with profit?
In our recent survey report "Navigating a New Era for the Non-Executive", published in collaboration with BDO LLP, we explored 200 small and mid-cap boards’ attitudes to ESG* and were initially surprised at the results: both the E and the S featured very far down the Risk and Opportunity lists, seemingly eclipsed by more immediate and existential priorities.
However, our survey also showed that Non-Executive Directors (NEDs) are very focused on ESG education, placing environmental and social topics high on their education plan (3rd after Governance and Cybercrime). Given the crucial role NEDs can play in steering organisations towards a sustainable future, the desire in the NED community to upskill is notable.
Until perhaps more recently, we’ve witnessed a surge in corporate focus on climate initiatives, driven by increasing regulatory scrutiny, investor pressure, and heightened consumer awareness. Some would argue a substantial part of this has been greenwashing. However, a growing backlash against environmental initiatives has emerged this year, fuelled by concerns over economic costs and potential job losses - and perhaps an element of ‘ESG fatigue’. Is the climate transition task too great a problem to solve and too costly?
However many of the contributors to this newsletter argue that being a responsible business, building in the planet and people as key stakeholders, should not be seen as incompatible with profit: in fact the reverse. In interviews, I asked the ESG Director and the Company Secretary at components manufacturer and distributor Essentra plc and Mark Cuddigan (CEO of THIS, ex-CEO of Ella’s Kitchen and a leader in the B Corp movement) whether they saw a tension between pushing forward ESG initiatives and profitability: watch these interviews on pages 3 for their thoughts. Likewise, energy transition adviser Christopher Reeves sees “Value in Values” (page 5).
But no one thinks this is easy: the issues are complex and business has been buffeted by ever-changing policy winds (EV incentives for example). Business needs certainty and this is the call to action from one of our newsletter contributors, political adviser Iain Anderson. Iain recently led an independent review for the Labour Party proposing a new partnership between the Government and business on a modern industrial strategy with sustainability at its heart.
Can the polar bear and business thrive together?
This is a quote from the UK Directors' Climate Forum Chapter Zero’s recent FT campaign, and given the role of the boardroom in the huge climate transition task that lies ahead, I want to highlight here the vital role played by Chapter Zero in helping to support the NED community with its self-identified need for ongoing education. Having been at a few of their events recently (for example an excellent “Climate Scenario Game” where the audience and panellists dissected nature risk dilemmas), I highly recommend NEDs look to this organisation for support.
*I’ve used the acronym ESG here for ease but I am well aware the phrase is problematic – see the commentary by Addidat’s Beth Scaysbrook on page 20 of our survey report.
Have you read our September Survey Report with BDO?
If you haven’t seen our survey report in collaboration with BDO "Navigating a New Era for the Non-Executive", you’ll find it here:
Various aspects of our report appeared across the press and trade publications, such as the FT Working It column, Management Today, Sustainable Views, HR Director and Board Agenda. We were also delighted that so many NEDs reached out to tell us that it resonated with their experience, particularly that being a NED on a small or mid-cap board is hard work!
“a fascinating piece of research”
FT NED Programme
“a must-read”
The Non-Executive Directors Association (NEDA)
Key Findings
of boards struggle to attract the right NED talent, yet 25% say they need more NEDs.
of boards acknowledge gaps in their succession planning.
of boards feel NED remuneration isn’t keeping pace with growing demands.
lack a formal feedback process for NEDs, and 42% haven’t conducted an external board review since COVID.
The results are based on our survey of 200 UK board members earlier this year, exploring the evolving role of the modern NED and the key challenges shaping today’s boardrooms. Alongside insights on the top attributes valued in NEDs, we have highlighted what boards really think about different areas of concern, from the economy and access to capital, to ESG, AI, and Cyber issues.