This is a finding of a new report by Heidrick & Struggles, INSEAD and Boston Consulting Group (BCG). They surveyed 879 respondents from more than 25 countries and 19 sectors. In parallel, a series of roundtables and discussions were held with some 200 executives from around the world.
More than two-thirds of board members believe sustainability has little impact on their company’s financial performance. Only 10% believe sustainability has a negative impact on medium- to long-term financial results.
The survey found that most boards do not feel financial pressure to take action on sustainability, despite greater societal expectations on businesses in terms of ESG (corporate social responsibility). Of the respondents, 68% said that sustainability considerations today have “no effect” or a “minor effect” on financial performance, but 52% said that they act on sustainability because it is “the right thing to do”, with a similar number (51%) citing legal requirements as their main motive.
Staying informed
A significant majority (79%) of board members surveyed said their board had a very clear understanding of the strategic opportunities and risks presented by sustainability. But only 29% of executives feel sufficiently informed to monitor sustainability policies. No surprise there: 48% said sustainability knowledge or experience plays little or no role in selecting board members. As a consequence, 89% rely solely on updates from management to stay informed on the subject of ESG.
“If progress on sustainability is to improve, it is clear that further education, broader director diversity, and greater prioritization of ESG in the boardroom must be standardized to meet the challenges of the current environment,” said Alice Breeden, co-leader of European CEO & Board at Heidrick & Struggles.
“Action on sustainability is mostly driven by stakeholder pressure. This triggers risk averse and defensive behavior, leading to organizations that only do the bare minimum,” said Ron Soonieus, Senior Advisor at BCG, Director in Residence at INSEAD and co-author of the report.
For more information and the full report, visit the Heidrick & Struggles website.
Image: Kim Kuperkova/Shutterstock
