Building Climate Ready Boards Through Sustainability Expertise
Shifting regulations and stakeholder demands have propelled sustainability to the top of the corporate agenda in recent years, but with environmental crises intensifying and the SEC's Climate Disclosure rule recently unveiled, the fiduciary responsibilities of board members are reaching new levels of complexity.
Underscoring these challenges, a panel of experts, during a live discussion hosted by Michigan Ross and Ceres on March 27, emphasized the need for proactive board engagement in driving sustainability initiatives amidst the rapidly evolving landscape of sustainability challenges and opportunities.
The panelists, Winifred Pinet, President and Founder at Sycamore Associates LLC, Romas Pencyla, Americas Leader - IBM Sustainability Services at IBM, and Randi Mail, Director of Campaigns, Ceres Accelerator for Sustainable Capital Markets, brought diverse perspectives from their extensive experience working with companies across different sectors. Their collective expertise shed light on the complex interplay between sustainability goals, regulatory requirements, and business strategy.
Kicking off the discussion, Pencyla and Pinet, both past participants of the inaugural Building Board Expertise on Sustainability executive education program from Michigan Ross and Ceres, contributed their industry perspectives, shedding light on some of the most pressing sustainability challenges facing their companies and their clients.
Pencyla called attention to the challenge of balancing short-term ROI with long-term sustainability goals, noting that while many executives understand the importance of sustainability, funding transformative actions remains a struggle. “76 percent of boards, senior leaders, and CEOs say that strategy, as it relates to sustainability, is central to their strategy, but only 30 percent are only making progress towards it, and frankly, 47 percent say they're really struggling to fund those initiatives,” he remarked.
Pinet echoed the challenges Pencycla described and further expanded on the critical role of data, noting the difficulties brought by varying reporting standards. “What and how to report has been difficult because there are a variety of frameworks,” Pinet remarked. “The California law that's going to go into place is different from both what the SEC has just put forward and what is practiced in Europe,” she added before emphasizing the need to connect data to action as an opportunity for boards.
Supplementing Pinet’s mention of the SEC announcement, Mail provided insights into the specific changes outlined in the new Climate Disclosure rule, underscoring the urgency for companies to adapt to evolving regulatory expectations while also reiterating that climate risk is a financial risk. “According to the Federal Government, last year, climate disasters cost our nation over 145 billion dollars. So these are definitely very real financial risks that companies should be preparing to address from a risk standpoint, but also from an opportunities standpoint,” she added. For resources to learn more about the rule, Ceres invites learners to visit www.ceres.org/sec.
The insights shared by the panelists and the panel moderator, Tom Lyon, Dow Professor of Sustainable Science, Technology, and Commerce at Michigan Ross, converge on the overarching theme of the critical role of boards in navigating the evolving sustainability landscape and its challenges. Together, their discussions underscored the urgency for board members to possess the knowledge and skills necessary to effectively oversee sustainability strategies and navigate regulatory requirements.
The discussion also demonstrated the vital role of collaboration and knowledge sharing among industry stakeholders to accelerate progress towards a more sustainable future. “We have to look past compliance and build those connections internally and externally across industries amongst industry groups, amongst cohorts, like the one that that will come together for the [Michigan] Ross class,” Pinet added to the discussion, in reference to the Building Board Expertise on Sustainability online program, which launches on May 6, 2024.
As businesses and board members grapple with evolving sustainability challenges, forums like these will continue to play crucial roles in fostering dialogue, sharing best practices, and driving collective action.
