FT BOARD DIRECTOR PROGRAMME NEWSLETTER

“CSR is what companies do with their profits; ESG is how they earn profits to begin with.”

This quote from Shai Ganu at WTWCO pinpoints exactly why so many boards need to shift the way they view climate governance. Many directors, Ganu explains, see climate issues as falling under CSR, focusing on actions such as planting trees which is ‘admirable, but it’s not a sustainability strategy - it’s corporate giving.’

Shifting climate conversations to an ESG lens brings them into the centre of every decision, every process. It moves the conversation from ‘what can we give back’ to ‘how do we change direction before it’s too late.’

This is both a human and a business issue - and an urgent one, on both counts. ‘We’re transgressing six of nine planetary boundaries - thresholds beyond which Earth’s systems may shift into new, potentially irreversible states,’ Ganu emphasises.

‘Supply chains, manufacturing bases and investment portfolios’ are all at the mercy of the climate conditions that surround them, and failing to sufficiently mitigate these risks leaves business operations vulnerable. Drought, flooding, natural disasters and other physical risks are a significant factor, as are the processes and costs associated with keeping up with shifting regulations and transitioning to new systems or approaches.

While it may be tempting to focus on quick wins and or short-term fixes in the midst of global upheaval, climate issues are - and always will be - a universal part of every operation, and should be central to every business strategy. Changes may not yield immediate results, but are essential to the future of any business and should be at the heart of every board’s agenda.