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Do We Need New Competencies in the Boardroom and C-Suite? Part 2

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This article is an excerpt from the Future Boardroom Competencies 2020 Report compiled by Competent Boards and provided by Helle Bank Jorgensen, CEO and Founder.  This is the second part of a 2 part series and is a companion to her podcast Future Boardroom Competencies.  If you want to read the entire report, it can be downloaded here.

Today’s board members and business executives are traveling across a business landscape vastly different than ever seen before. The acceleration of globalization, proliferation of technology, and elevated urgency surrounding a changing climate and biodiversity loss has produced increasingly treacherous terrain for companies with rigid business models. Now in 2020, board members and other business leaders are forced to address these challenges against the backdrop of the global crisis that is the COVID-19 pandemic.

As the board of directors navigate a setting so unfamiliar, pressure mounts as all stakeholder groups are intently observing boardroom decisions with a growing list of expectations in-hand. Undoubtedly, the adverse impacts generated by these complex phenomena indicate that a great-reset in corporate governance is not only necessary but required – and business leaders must be prepared.

Our research uses qualitative analysis to evaluate survey responses from our international faculty members and reveal the quintessential competencies, qualities, and traits that are comprised within a future-ready board member.

We hope that the results of this report can be used as a road map for both current or aspiring board members to reflect and act on what it is that they need to cultivate in order to effectively lead companies through future storms, and emerge on top with a refined sense of purpose. Many are calling the unprecedented challenges a tsunami – either leaders learn to surf, or they and the companies they serve will sink.

Today, we are in a world of despair where transgressing planetary boundaries continue to create new risks for businesses such as increased resource limitations, and supply chain disruptions.

We are not only transgressing the planetary boundaries, but also social and cultural ones. Technology has provided an opportunity for people to be more connected than ever. But many are feeling left out or struggling with cyberbullying, fake news, and constant bombardment of new information and expectations that put a strain on mental health.

Human rights are under tremendous pressure as modern slavery and economic exploitation of human life, as well as nature, is on the rise. This makes the role of directors and executives even harder to navigate, as stakeholders can use their phones to ruin a company’s reputation within a few seconds. With so many moving pieces, companies and their directors may struggle to ensure that all operations can stand up to the scrutiny of stakeholders and uphold the integrity they expect.

We need to move towards a net positive impact on nature, humans, and the economy. And to do so the actions of board of directors and executives must extend beyond a nicely written report. ESG (environmental, social, and governance) integration requires leadership and an ESG transformation mindset. Therefore, board members and executives must ensure that this mindset is embedded across all levels of the organization.

With more attention being cast to the board of directors in addressing various environmental, social, and economic challenges, new initiatives will continue to alter the regulatory landscape. The European Commission recently announced a proposed intervention in the area of corporate law and governance with the general objective of establishing more robust accountability measures to improve a company’s integration of sustainability into long-term decision making.² This initiative, among other mounting pressures, underscores the responsibility of the board of directors and its power in creating meaningful action.

The board of directors is obliged to not only deliver returns to shareholders but also to clearly define the role of the company in society. A society that in return expects that elected board members bring exceptional capabilities to the boardroom.

For example, board members should have an understanding of how company resources are being utilized and be clear on how these actions impact nature and stakeholders. Furthermore, the board of directors must understand how the current and future states of nature and society will impact the company and its ability to thrive in the long-term. A task that has been considered “one of the most demanding, complex and taxing activities in the world of public life”.³ With increased public discussion on the role of corporations in times of crisis such as COVID-19, there is increasing stakeholder pressure for board members to perform on ESG-related issues.

A recent survey from Edelman found that 71% of 12,000 respondents would lose trust in a company if they perceived that the company was placing profit over people.⁴

Leading companies have certainly responded to these pressures. It was recently reported that 63 of the 100 largest public companies now have a board committee overseeing sustainability matters.⁵ However, the same study identified that only 17% of those serving on these committees had relevant training or experience when it comes to ESG and sustainability. ⁶

This dichotomy emphasizes how critical it is that board members work towards building and applying the necessary competencies in addressing ESG-related issues and adopt an approach to leadership that facilitates ongoing dialogue with shareholders and other stakeholders.

We are now in a period of awakening, where major transformations are taking place in all corners of the globe, altering the traditional context for boardroom decision making and heightening the expectations of corporate leaders and board of directors. We believe that reformulating the pre-existing definition of corporate stewardship in the 21st century will catalyze a pivot in social outlooks from one of despair to one of hope.

 

This report explores the foundational requirements board members need in order to navigate the dynamic nature of a world evolving faster than ever before.

(2) Study on directors’ duties and sustainable corporate governance (European Commission, 2020) – https://op.europa.eu/en/publicationdetail/-/ publication/e47928a2-d20b-11ea-adf7-01aa75ed71a1/language-en (3) How to Play the Board Game (The Economist, 2020) – https://www.economist.com/business/2020/11/21/how-to-play-the-board-game?src=gft (4) Trust Barometer Special Report: Brand Trust and the Coronavirus Pandemic (Edelman 2020) – https://www.edelman.com/research/covid-19-brand-trust-report (5) The Sustainability Board Report 2020 – https://www.boardreport.org/reports-research (6) Ibid

 

Do you know of top ESG Competent Boards and Board Members?  You can nominate those you believe should be highlighted in the Competent Boards list here.

About the Author

Helle Bank Jorgensen is the CEO of Competent Boards, which offers the global online ESG Competent Boards Certificate Program with a faculty of over 95 renowned international board members; executives and experts.

A business lawyer and state-authorized public accountant by training, Helle helps global companies and investors turn sustainability into strong financial results. She was the creator of the world’s first Green Account based on lifecycle assessment, as well as the world’s first Integrated Report and the first holistic responsible supply chain program.

Helle has written numerous thought leader pieces, is a keynote speaker, and is interviewed by global media outlets.

Image by spokane1977 from Pixabay

Do We Need New Competencies in the Boardroom and C-Suite?

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This article is an excerpt from the Future Boardroom Competencies 2020 Report compiled by Competent Boards and provided by Helle Bank Jorgensen, CEO and Founder.  This is part 1 of a 2-part series and is a companion to her podcast Future Boardroom Competencies.  The entire report, Future Boardroom Competencies can be downloaded here.

FOREWARD

There is no telling what will define the business landscape post-pandemic. However, the trend remains clear. The foundation on which our global economic systems and governance practices have been built is nearing expiry.

With a heightened sense of urgency surrounding environmental, social, and humanitarian problems, there is an elevated sense of societal pressure on leading organizations and their board of directors to take action.

The future of good corporate governance has begun to outgrow the notion of transactional thinking with respect to decision making. Serving board of directors must apply a strategic approach to meeting the growing expectations of shareholders and all other stakeholders. An approach that requires deep reflection on purpose, analysis of strategy, and consideration of all perspectives in an effort to achieve short-term profitability and long-term sustainable value creation.

As the world enters a period of reset, board members should not only equip themselves with the necessary competencies to meet new expectations but should also be willing to adapt their own outlook through a strong willingness to learn.

The findings of this report suggest that in order for board members and other executives to be future-ready, they must stay curious with a strong willingness to expand their knowledge and adapt to new conceptual interpretations. Moreover, board members should be constructively critical in challenging the status quo with respect and integrity.

Future-ready board members are highly focused on cooperative decision-making and inclusiveness. They have a demonstrated ambition to tackle systemic inequalities through actions that increase board diversity and promote a more equitable decision-making process. They are ready to apply their wisdom in making sense of complex information to effectively balance the needs of all stakeholders and adapt the strategic approach accordingly.

Any leader must understand the interconnectedness across environmental, social, and governance (ESG) issues and how it relates to business strategy. Obtaining the relevant ESG and sustainability competencies is imperative for business leaders in understanding how future scenarios may expose the company to emerging risks or present further business opportunities.

I hope that you will find value in this report and use it to reflect on and further develop your competencies.

 

EXECUTIVE SUMMARY

This report provides an overview of the essential competencies, qualities, and traits the board of directors and other business professionals will need to navigate the dynamics of a global business landscape shaped by the greatest challenges of our time.

Organizations and the individuals that lead them hold the innate responsibility of delivering on a shared vision that drives long-term sustainable value creation while executing on short-term needs.

As global conditions come to normalize, we enter a period of great reset – for which the board of directors need to be prepared.

Using data collected via survey, this analysis evaluates insights from the Competent Boards global faculty and other business leaders in an effort to determine the elements comprised within a future-prepared board member.

The report uses the qualitative method to draw a comprehensive list which business leaders can use to reflect on their ability to effectively manage emergent risks and opportunities.

We asked four questions:

  • What does stewardship in the 21st century look like?
  • What does a future-prepared board member look like?
  • What new competencies are, or should be, demanded of board members?
  • What are the personal traits, qualities, and diverse perspectives needed in the boardroom?

The findings indicate that future-ready board members will need to apply a lens of curiosity that supports a culture of continual learning and strategy adaptation in order to meet growing expectations.

The survey determined that effective board leadership should be aligned with a distinct sense of purpose that is informed by a deeply-seated literacy of the material ESG challenges faced by the company.

Although an objective list of relevant skills and experience may apply to every qualified board member, the survey results indicate that the definition of a future-prepared leader may extend further.

According to the survey’s findings the personal attributes or traits within an individual’s internal value system may also play a role in defining a board member who is future-prepared.

As the COVID-19 pandemic shines a light on the many cracks within the foundations of our societal and governance structures, it becomes clear that the board of directors is expected to leverage their power and influence to take meaningful action.

The findings indicate that board members must reflect on their current outlook and set of competencies in order to identify areas for which they can develop their capacity to meet demands for extraordinary board-level stewardship in the 21st century.

Do you know of top ESG Competent Boards and Board Members?  You can nominate those you believe should be highlighted in the Competent Boards list here.

About the Author

Helle Bank Jorgensen is the CEO of Competent Boards, which offers the global online ESG Competent Boards Certificate Program with a faculty of over 95 renowned international board members; executives and experts.

A business lawyer and state-authorized public accountant by training, Helle helps global companies and investors turn sustainability into strong financial results. She was the creator of the world’s first Green Account based on lifecycle assessment, as well as the world’s first Integrated Report and the first holistic responsible supply chain program.

Helle has written numerous thought leader pieces, is a keynote speaker, and is interviewed by global media outlets.

 

Photo by Danielle Cerullo on Unsplash