Is your board being proactive at leading business transformation?
30 October 2023 - CISL Director of Leadership & Culture, Gillian Secrett explains how boards play a key role in transforming organisations to align with a sustainable future.
As the main body of governance, responsible for direction, oversight and accountability of an organisation, boards play a pivotal role in transforming organisations to align the fundamental value creation goals of the company with a sustainable future. For any organisation pursuing long term growth and resilience, achieving business success in service of a sustainable future makes sound commercial sense. It requires boards to move their organisations beyond business as usual to create value in a way that seeks to optimise everyone’s wellbeing, supported by healthy social and environmental systems rather than undermine the very resources upon which that business success depends.
Key trends for boards to consider:
Boards need to be proactive in response to the growing emphasis on ESG and sustainability factors, including nature and biodiversity, which are broadening the scope of governance. Boards need to extend their reach and prioritise to deal with an increasing load of complex and diverse external issues putting pressure on board time and resources available as they govern their organisations through transformation.
The recent move towards mandatory sustainability reporting and the collection and monitoring of accurate data together with the potential impact of supply chain due diligence requirements are two legal trends which boards must embrace to support their effective transformation.
Another important focus area for boards to consider is board composition. Boards that see diversity of membership, (age, sex, culture, social background, education, disability), as an opportunity to bring diversity of thought to the table, rather than simply a compliance exercise will be able to broaden the perspective and experience of the board to take the board across this new horizon. The importance of the role of the chair to enable a constructive and inclusive culture, manage the power dynamics at play and ensure each member of the board is heard and understood is just as important as having the right people in the boardroom. Considering the structure and reporting lines of board sub-committees as well as where accountability lies for the collection and monitoring of data and how this gets reported up to the board are also essential elements about which the board needs to concern itself.
The Future of Boards:
Over the course of 2023, CISL has been releasing findings from The Future of Boards research study, conducted in partnership with the global law firm DLA Piper. The research explores key trends in how board practice and the wider legislative environment are changing around the world; how aligned with a sustainable future these trends and their drivers are likely to be; and the practical implications for boards.
The most recent Future of Boards reports have mapped the landscape and identified 22 emerging trends influencing board practice and explores how they these trends might act as barriers or enablers of business transformation to a sustainable future. The research includes a set of 20 questions, to help boards get proactive, to use as a tool to facilitate discussion and prepare strategically.
The research concludes that a board that is fit for the future will:
- operate proactively in a dynamic and complex context through a clear sense of its roles and responsibilities,
- anticipate and help shape the rapidly changing legal and regulatory landscape explicitly around sustainability,
- ensure that its composition, capability, culture and dynamics are fit for purpose,
- align its purpose and strategic decision – making, supported by effective materiality assessment, use of information and engagement with stakeholders.