- Report shows potential competency gap as combined climate
change knowledge and board-relevant business experience not widely
present
- 50% of all board members expressed concerns with the level
of reporting they receive on climate change progress
- 75% of boards believe climate change is important to
companies' success, yet few board governance measures link
executive performance to climate change goals
CHICAGO and PARIS, Dec. 13,
2021 /PRNewswire/ -- Heidrick & Struggles (NASDAQ:
HSII), a premier provider of global leadership advisory and
on-demand talent solutions, and INSEAD, the business school for the
world, released today a new report, Changing the Climate in the
Boardroom, that reveals how 301 board members in 43 countries,
primarily in North America and
Western Europe, view their boards'
action on climate change.
The survey revealed signs of continued progress in corporate
commitment to climate change. 75% of boards believe climate change
is very, or entirely important, to the strategic success of their
companies, with 72% reporting confidence that their company will
reach its climate change goals.
The more concerning findings centered on competency, knowledge
and implementation.
- 50% of all board members expressed concerns with the level of
reporting they receive on climate change progress.
- 69% said climate change knowledge is not a formal requirement
for joining their board, and climate change knowledge is not
included in their board's competency matrix.
- 65% said that knowledge of climate change is not a formal
requirement in CEO selection.
- 74% of boards do not prioritize climate change in executive
performance metrics.
The data also revealed a talent paradox: the best leaders on
climate change often do not have board experience, and those with
skills to navigate board dynamics often lack true understanding of
climate change.
"As companies continue to evolve their ESG efforts – marked by
real shifts in priorities in this pandemic era – boards whose
primary focus is enforcing good corporate governance must lead on
climate change. Regulatory and other pressures are converging to
influence access to capital, as insurers, investors and lenders are
increasingly requiring ESG disclosure that mirrors financial
reporting to secure funding," said Louis Besland, Partner in
Heidrick & Struggles' London
and Paris offices and a member of
the Industrial and CEO & Board of Directors practices.
Most companies have implemented the basic tenets of good
corporate governance related to climate change. Over 80% of
companies have someone that is responsible for reporting on climate
change to the board. But the scope of emissions targets are
limited: only 16% reported their companies have targets for carbon
emissions beyond their control (including their suppliers' and end
users' emissions).
"The notion of what constitutes effective climate change
governance is evolving as global dynamics, stakeholders and
activists' pressure take hold. It is increasingly a top focus –
from investors for whom climate is a priority in their
financial-backing of organizations, to boards of directors
scrutinized to integrate climate transition as part of the
strategy; and from increased societal scrutiny around greenwashing
with clearer metrics available on impact and results that count,"
said Sonia Tatar, Executive Director
at the INSEAD Corporate Governance Centre which led the survey from
the school.
The report from Heidrick & Struggles and INSEAD includes
several practical measures boards can take to ensure companies are
ready to meet the growing demands of stakeholders:
- Consider adding more climate change voices with relevant
expertise to the boardroom.
- Create board chair accountability on the processes and dynamics
that support advancing climate change as, increasingly, companies
that lack the ability to prove ESG metrics or meet stated goals may
find they have limited access to capital in the future.
- Anchor climate change strategy in social and organizational
purpose, and connect it to specific operations.
- Integrate climate change objectives into executive compensation
and search strategies, especially for the CEO.
- Build climate-related disclosures with the same rigor required
of financial disclosures.
About the Report
The survey was conducted during
September and October 2021 through
the global INSEAD and Heidrick & Struggles corporate governance
networks. 301 respondents from 43 countries completed surveys, and
74% of respondents were at companies headquartered in North America and Western Europe. Board members were from a
wide-range of industry sectors and sizes. 227 respondents were
non-executive directors from various board committees, with audit,
nomination and remuneration being the most common functions.
Notably, 77 were members of a sustainability committee.
About Heidrick & Struggles
Heidrick &
Struggles (Nasdaq: HSII) is a premier provider of global leadership
advisory and on-demand talent solutions, serving the senior-level
talent and consulting needs of the world's top organizations. In
our role as trusted leadership advisors, we partner with our
clients to develop future-ready leaders and organizations, bringing
together our services and offerings in executive search, diversity
and inclusion, leadership assessment and development, organization
and team acceleration, culture shaping and on-demand, independent
talent solutions. Heidrick & Struggles pioneered the profession
of executive search more than 65 years ago. Today, the firm
provides integrated talent and human capital solutions to help our
clients change the world, one leadership team at a
time.® www.heidrick.com
About INSEAD, The Business School for the World
As one
of the world's leading and largest graduate business schools,
INSEAD brings together people, cultures and ideas to develop
responsible leaders who transform business and society. Our
research, teaching and partnerships reflect this global perspective
and cultural diversity.
With locations in Europe
(France), Asia (Singapore), the Middle East (Abu
Dhabi), and now North
America (San Francisco),
INSEAD's business education and research spans four regions. Our
168 renowned Faculty members from 41 countries inspire more than
1,100 degree participants annually in our Master in
Management, MBA, Global Executive MBA, Specialised Master's
degrees (Executive Master in Finance and Executive Master in
Change) and PhD programmes. In addition, more than 12,400
executives participate in INSEAD Executive Education programmes
each year.
INSEAD continues to conduct cutting-edge research and innovate
across all our programmes. We provide business leaders with the
knowledge and awareness to operate anywhere. Our core values drive
academic excellence and serve the global community as The Business
School for the World. www.insead.edu
About INSEAD Corporate Governance Centre
The INSEAD
Corporate Governance Centre (ICGC) has been actively engaged in
making a distinctive contribution to the knowledge and practice of
corporate governance globally. Our vision is to be the leading
center for research, innovation, and impact in the field of
corporate governance. Through its educational portfolio and
advocacy, the ICGC seeks to build greater trust within the public
and stakeholder communities, so that businesses are a strong force
for improvement, not only of economic markets but also for the
global societal environment.
www.insead.edu/centres/corporate-governance
Media Contacts
Heidrick & Struggles
Mindi Wood
mwood@heidrick.com
M Booth
John McLaughlin
johnm@mbooth.com
INSEAD
Aileen Huang
Aileen.huang@insead.edu
Cheryl Ng
Cheryl.ng@insead.edu