How can chairs and boards help build momentum to meet the sustainability challenge

The multifaceted nature of climate-related challenges requires relentless focus from the board, with the board chair playing a critical role as the leader of the board, strategic partner to management, and as ambassador and tone-setter for the organization.

The 2023 Deloitte Global survey of global C-suite leaders on sustainability revealed that, across industries, many organizations are only beginning to take concrete actions that embrace the transition to a low-carbon future. Overall, the survey findings highlight the need for a greater sense of urgency and accountability to help move the needle on the climate challenge agenda.

To understand barriers to progress and the pivotal role chairs can play in helping to accelerate climate progress, the Deloitte Global Boardroom Program interviewed 230 chairs of some of the largest companies in the world. These comprised listed and private entities, including a number of large family businesses. Insights and quotes were gathered via interviews, roundtable discussions, and surveys between 2022 and 2024.

The findings reveal that, amid a sea of competing priorities, chairs will need to maintain a focus on sustainability while considering the long term in both thinking and investments; manage a wide range of stakeholder expectations; keep abreast of a fast-moving regulatory environment; and help ensure the boards they chair have the appropriate knowledge base and skills to help address the climate challenge—to name just a few.

The chairs Deloitte interviewed say the climate crisis is organizations’ top three priority and understand the urgency of the climate crisis and believe responding to climate change and sustainability should be at the heart of their organizations’ business model. In 2023 Deloitte Global survey of global C-suite leaders on sustainability, 42% of respondents rated climate change as a “top three issue” for their organizations and 61% said they expected climate change to impact their companies’ strategy and operations over the next three years.

Addressing the climate challenge requires long-term investment, measurement, and accountability. Many chairs pointed out the need to build accountability and transparency to stakeholders as well as a framework for measuring the effectiveness of climate activities over the short, medium, and long term. 

But chairs find that climate actions do not always translate easily into business economics, which can make their conversations with board members, management, and investors hard. 

However, there are consequences to doing nothing. Deloitte’s Global Turning Point report finds that inaction on climate change could cost the world’s economy US$178 trillion by 2070. By contrast, the global economy could gain US$43 trillion over the next five decades by rapidly accelerating the transition to net zero. 

Another reason to focus on integrating climate strategy into business strategy is it acknowledges that climate action is a top priority, not a tacked-on, side conversation. 

When asked about how to best partner with management, chairs considered it their role to remind management of broader societal expectations, watch out for practices that may be seen as greenwashing and could increase potential litigation risk, and provide support for the climate transition.

Chairs should provide stewardship amid multiple stakeholder expectations. More and more stakeholders, including regulators, investors, employees, and customers, are focusing on climate-related matters and expecting companies to act. Some shareholders are calling on companies to make greater efforts to address climate change and to help ensure that businesses can remain competitive and grow. Employees are unequivocal proponents of climate action and show great interest in the company’s climate and wider corporate social responsibility, particularly ethical, policies. This aligns with Deloitte Global’s 2023 Gen Z and Millennial Survey, which shows companies’ response to the climate challenge is a key factor in attracting and retaining talented younger employees. The younger generations believe that business should take a leading role in helping to address social issues ranging from inequality to environmental sustainability. 

The role of chairs in driving sustainability initiatives and addressing the climate crisis is paramount in today's dynamic business landscape. The following advice may help provide a road map for the chair of the future on how to tackle the climate challenge.

•    Cultivate a network of peers.  Find and connect with peers who are exploring and addressing climate challenges to share experiences and ideas.

•    Find allies and explore how to advance together. Examples could include collaborations with membership bodies and industry associations to explore solutions to help address climate change.

•    Evolve with your ecosystem and communicate about actions and ambitions.

•    Align purpose, strategy, and executive appointments. 

•    Embrace an innovation mindset.

•    Champion the climate agenda. 

•    Foster a culture of continuous learning. Chairs and boards should keep educating themselves on the latest developments.

This article is an excerpt from the 2024 “Chair of the Future” article, brought to you by the Deloitte Global Boardroom Program. It is based on thoughtful conversations with over 200 board chairs worldwide. To read the full article, please click HERE.

Narain Chutijirawong
Executive Director, Clients & Markets
Deloitte Thailand