In light of record breaking temperatures around the world this month, EY has identified annual temperature anomalies and shifting El Niño patterns as July’s geostrategic indicator of the month. El Niño cycles typically last around two to seven years, and they bring about warmer air and ocean temperatures as well as extreme weather events. The resulting droughts, flooding, and heatwaves weaken infrastructure and damage corporate assets, therefore long-term planning to mitigate those risks is essential.
As the impact of climate change grows, business leaders and board members must understand the potential impacts to their organisations and how best to prepare. Our world-class Global Competent Boards ESG and Climate & Biodiversity programs will prepare boards and business leaders to navigate these challenging times.
1. Disability: an overlooked aspect of corporate diversity. When discussing diversity, equity, and inclusion (DEI) at a board level the conversation tends to focus on gender parity and including Black, Indigenous, and people of colours (BIPOC) voices. Ted Kennedy Junior, a former senator turned healthcare rights lawyer who lost his leg to cancer as a child, is pushing to bring disability into that conversation. Only 7% of companies surveyed in the 2023 Disability Equality Index had a member on their board who had a disability. According to Accenture, organisations that work to include disability in their DEI strategies have 28% higher revenues and 30% higher profit margins than their counterparts. Kennedy believes nomination committee should include disability as a category alongside ethnicity, age, and gender.
2. Balancing short versus long term value of ESG. According to research published by EY, 43% of chief financial officers shared that environmental, social, and governance issues were a top priority in long term investment decisions. The second and third highest priorities were technology and digital innovation. The CFOs surveyed also shared that sustainability was one of the highest priority topics with regards to the financial operations of their organisations. Despite this prioritisation of ESG and sustainability, half of the respondents stated that in order to meet short term profit goals they were limiting funding for areas identified as long term priorities. Nearly 40% of respondents were cutting or freezing ESG-related spending, with 66% admitting there were internal struggles in their organisations on how to balance short and long term goals.
3. Canada’s ombudsperson hones in on international human rights abuse. Following criticism that the Canadian Ombudsperson for Responsible Enterprise (CORE) failed to do its duty, the office announced it would be investigating human rights abuses in Xinjiang, China. CORE is responsible for monitoring the international operations of the Canadian fashion, mining, and fossil fuel industries to ensure human rights abuses are not occurring. A year after the UN High Commissioner for Human Rights concluded that Uyghurs were suffering significant abuses, CORE will investigate the Chinese operations of Nike Canada and Dynasty Gold Corp. As scrutiny grows, organisations that operate in areas notorious for modern slavery must ensure that every supplier and manufacturer they work with is operating in compliance with human rights regulations.
4. Harnessing Gen Z talent in the banking industry. In the next two years, Gen Z will grow to make up over a quarter of the global workforce. Employers in banking must learn how to attract and retain talent from the next generation of workers. Here are six ways to do that:
- Prioritise corporate diversity and inclusion as that is one of the highest priorities for Gen Z employees
- Modernise finance jobs as Gen Z are statistically more likely to jump from job to job rather than stay in one organisation for their whole career
- Work with Gen Z employees to determine the learning style that they benefit from the most, and implement that throughout the onboarding and training process
- Replace outdated technological systems to make them more attractive to younger and more tech savvy generations
- Focus on developing corporate purpose and embedding it throughout operations, as younger generations value companies with positive social impacts
- Develop wellness strategies and allow flexible work
5. Stock prices suffer after ESG controversies. ESG issues such as modern slavery, poor sustainability practices, and a lack of diversity and inclusion strategies can have significant impacts on companies. Clarity AI conducted research that found organisations that suffer from an ESG-related controversy see a 2-5% drop in stock price. To avoid long-term reputational, legislative, and regulatory risk, organisations must be proactive in preventing ESG controversies from arising in the first place.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.
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