By mathew-loup

The discussion forums are empty, the raclette wheels have all been eaten, and the bars of chocolate are safely stowed in luggage for the trip home. Another successful iteration of the World Economic Forum’s annual meeting wrapped up this week in Davos, Switzerland, where more than 2,700 of the world’s great and good from 130-plus countries came together to discuss the current polycrisis and address the issues the world faces ahead.

One of the biggest challenges everywhere is climate change. Our very own Founder and CEO, Helle Bank Jorgensen, is a leading voice on the subject and was a major presence in Davos as a panellist at three events: a discussion based on giving nature a seat at the boardroom table; a roundtable on elevating corporate accountability for World Benchmarking Alliance; and Wall Street Journal’s event Human Rights and the ESG Compliance Paradigm. 

WEF’s theme for this year’s event was “Cooperation in a fragmented world”, and environmental, social and governance (ESG) topics dominated discussions for five days. The world will now hope for outcomes from those. As a board director or senior business leader, you, too, can play your part by getting better informed about these complex challenges. So why not register today for one of our world-class ESG and Climate & Biodiversity education programs!

As always, please keep your news tips and suggestions coming to mathew.loup@competentboards.com or join the conversation on LinkedIn when we post this weekly digest. 

1. Questions of trust. Edelman unveiled its annual global survey at Davos this week. According to the 2023 Edelman Trust Barometer, business remains the most trusted institution (62%), ahead of NGOs, government and media, with the gap between business and government showing no signs of closing. However, that overall trust dropped in 15 out of 27 countries surveyed, with only the US (+6%) showing major improvement compared with last year. In terms of the “S” in ESG, more than two-thirds of global employees (69%) believe that companies having societal impact is a strong expectation or potential deal-breaker when considering a job. The key factors they seek are that the company:

  • Reflects their values
  • Has a greater purpose
  • Offers meaningful work that shapes society
  • Takes opportunities to address social problems
  • Stops specific business practices if employees object
  • Has a CEO who addresses controversial issues that employees care about

Despite that, more than half of respondents (53%) said that businesses are not doing enough on climate change. The Edelman Trust Institute surveyed more than 32,000 respondents across 28 countries for the 2023 Barometer. 

2. SDGs at risk. The vast majority of CEOs fear that progress on the UN’s Sustainable Development Goals (SDGs) is in real jeopardy, according to a new report by Accenture and the UN Global Compact (UNGC). The 12th United Nations Global Compact-Accenture CEO Study found that 87% of CEOs surveyed believe geopolitical and economic barriers are impeding the SDGs. On top of that, 93% are experiencing 10 or more simultaneous challenges to their companies. Despite this pessimism, almost all (98%) CEOs say that sustainability is core to their role. “Businesses continue to be impacted by multiple shocks,” said Sanda Ojiambo, Assistant Secretary General, CEO and Executive Director UN Global Compact, in a news release. “As a result, on a broad range of issues, from runaway climate change to widening social and economic inequalities, business action right now does not match the ambition and pace needed to achieve the Sustainable Development Goals by 2030.” Accenture and the UNGC surveyed 2,600 CEOs from 128 countries for the report. 

3. The future of board governance. American board directors are feeling the squeeze on all sides. Looking at the year ahead, the threat of economic recession looms largest, followed by increased competition for talent, rising inflation, global supply-chain disruption and growing regulatory requirements, according to NACD’s 2023 Governance Outlook. In terms of board oversight, more than two-thirds of directors surveyed identified strategy development as the top priority, but only 38% singled out climate governance (and of those, a mere 7% flagged it as very important). Despite that, more than half the respondents (59%) believe that their boards have the capacity and expertise to oversee climate risk. 

4. Canada makes progress. A new survey by legal firm Fasken of Canada’s largest 80 public companies has revealed some encouraging ESG data. The 2023 ESG Disclosure Study found that of the companies surveyed, almost all (83% of TSX60 companies, 95% of CEC40 companies) reported they had at least one director with ESG expertise. More than two-thirds (68%) now offer their CEOs and other senior leadership incentives that were at least partly contingent on meeting ESG objectives. The report also identifies six key trends for board directors to monitor:

  • Increasing ESG regulations worldwide
  • Rising shareholder engagement on ESG-related issues
  • Greater demands for third-party assurance of companies’ ESG data
  • ESG ratings providers will face pressure to ensure transparency around methodologies they use
  • More ESG issues gaining greater prominence, such as biodiversity, cybersecurity and human rights due diligence and biodiversity
  • Sharper focus on Indigenous reconciliation plans

5. ESG impacts on credit. Credit ratings and risk analysis giant Moody’s Investors Service has looked in its crystal ball to gauge the year ahead. Its new report, 2023 ESG Outlook, highlights four ESG factors that will shape credit quality in 2023: 

  • Increasing scrutiny of corporate decarbonization plans amid heightened execution risks for green investments
  • Elevated social risks for public- and private-sector entities due to high cost of living concerns 
  • Rising refinancing risks for lower-rated issuers leading to weakened resilience to external shocks
  • Evermore complex ESG regulatory landscape that is raising reputational and financial risks

The report also identified four ESG trends for board directors and senior executives to watch: 

  • Greater understanding of the financial costs of physical climate risks and adaptation 
  • The integration of just transition considerations into energy transition plans 
  • Growing regulatory attention on natural capital and biodiversity issues 
  • Mounting pressure on companies to reduce waste and reuse content by implementing circular economy solutions 

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.

Back To News & Views