Three climate fights will dominate COP28: Methane emissions reduction, filling gaps in climate finance, and the ideological debate over the future of fossil fuels (The Economist)
The conference’s location and leadership symbolize the complex relationship between the global economy’s reliance on fossil fuels and the pressing need to combat climate change
US and EU Lead Push for COP28 to Back Tripling of Renewables (Bloomberg)
ECB Sends Stark Warning to Bank Executives With ESG Regulation (Bloomberg)
Five Takeaways From a Sweeping Report on Climate Change in the US (Bloomberg)
The Fifth National Climate Assessment surveys a country grappling with extreme heat, floods and other impacts of a warming planet.
Let Corporate Purpose Guide You Through ESG Turbulence (HBR)
Businesses Are Struggling To Find The Right Balance On Sustainability Reporting (Forbes)
Prioritizing True Sustainability: Looking Beyond ESG Metrics in Investing (Nasdaq)
A $1.5 Trillion Loan Market Gets Stung by Anti-ESG Movement (Bloomberg)
“Green is good” has been the big business mantra for a while now. Sustainability has evolved in a way that companies are increasingly acknowledging that it is the foundation of resilience, growth, and long-term success. It also became recognized by boards as a source of innovation and competitiveness.
The importance of incorporating sustainability at the heart of the business is driven by several compelling factors:
Consumer Preferences: Consumers are making deliberate choices, favoring companies that reflect their values.
Investor Pressure: Shareholders and institutional investors are increasingly demanding ESG performance disclosure.
Risk Mitigation: Businesses face considerable risks as a result of climate change and social challenges. The World Economic Forum’s 2022 Global Risk Report recognized climate action failure and extreme weather occurrences as top global threats.
Regulatory Mandates: Governments worldwide are enforcing stronger requirements on sustainability reporting and carbon emissions. Examples include the EU’s Green Deal and the United Nations’ Sustainable Development Goals.
Talent Attraction: According to a Deloitte report, 64% of millennials and 75% of Gen Z workers prefer to work for organizations that support societal and environmental aims.
Data supports the notion that sustainability is a key driver of competitiveness and long-term success. According to a BCG study, companies with strong ESG performance had greater market valuation multiples than their peers.
Sustainability has evolved into an overarching idea that pervades every facet of company culture and decision-making, shaping a company’s purpose, values, and identity.
This ideological transformation of sustainability results in three main positive impacts on organizations’ behaviors: long-term vision instead of short-term strategy; cultural transformation, aligning companies’ operations with the well-being of society and the environment; and an integrated approach, making sustainability a duty, not only of a single department but of the entire organization.
With this transition from strategy to ideology, corporate leadership’s role has adapted accordingly:
From Oversight to Advocacy: Boards have moved away from simply managing sustainability projects and towards advocating for sustainability as a core principle, advocating for incorporating sustainability into the company’s DNA.
From Reporting to Impact: Boards started making Sustainability reporting a tool for proving true effect with transparency and increasing organizations’ reputation.
From Profit to Purpose: Profit and purpose are no longer mutually exclusive for leadership teams. Sustainability entails not only financial achievement but also positively contributing to society and the environment.
The transformation of sustainability from a strategic goal to an overarching ideology signals a watershed point in business leadership, and Boards of directors have a critical role in driving this change. Thus, adopting a holistic Environmental, Social, and Governance (ESG) framework emerges as a critical tool as board leadership navigates the challenging terrain of sustainability and regenerative business models.
A thorough ESG framework helps organizations succeed in a fast-changing world by guiding decision-making, aligning with stakeholder expectations, and identifying risks and opportunities.
The adoption of a holistic ESG framework profoundly influences sustainable board leadership by:
Competitive advantages over business rivals. Companies with successful ESG reports can improve their market position and brand strength compared with competitors.
More attractive to ESG-focused investors. ESG investing has become a significant part of capital markets.
Better financial performance. ESG initiatives can help improve a company’s overall financial performance by reducing energy bills, operating costs and other expenses, in addition to potentially driving higher sales.
Increased customer loyalty. Companies that adhere to ESG principles can more easily attract and retain customers who apply ESG considerations in buying decisions.
More sustainable and resilient business operations. Organizations with ESG-informed boards are more resilient and able to endure unanticipated shocks while remaining committed to sustainable goals.
Beatriz Canamary is a consultant in Sustainable and Resilient Business, Doctor and Professor in Business, Civil Engineer, specialized in Mergers and Acquisitions from the Harvard Business School, and mom of triplets. Today she is dedicated to the effective application of the UN Sustainable Development Goals in Multinationals.
She is an ESG enthusiast and makes it possible to carry out sustainable projects, such as energy transition and net-zero carbon emissions. She has +15 years of expertise in large infrastructure projects.
Member of the World Economic Forum, Academy of International Business and Academy of Economics and Finance.
