As our climate continues to warm, water scarcity is worsening dramatically around the world. Droughts have led to record low reservoir levels across the United States, historic wildfire seasons in Canada, warmer and longer heat waves in the Mediterranean, and reduced crop yields in South America. According to the World Resources Institute, global household fresh water consumption increased by 600% from 1960 to 2014, while agriculture and manufacturing is responsible for almost 90% of the world’s water usage. While governments around the world are putting plans in place to conserve water, companies must act proactively — particularly those in the agriculture sector and industries such as fashion that use huge amounts of water in their supply chains. 

Climate change creates numerous unique challenges for board members and executives, and businesses must be prepared in order to address them effectively. One of the best ways to do this is via education, such as our world-class ESG and Climate & Biodiversity programs for boards and business leaders.

1.  ISSB standards expected at the end of June. The International Sustainability Standards Board (ISSB) will be releasing two finalised sustainability standards at the end of June, most likely during the International Financial Reporting Standards (IFRS) Foundation Conference. IFRS S1 and S2 will focus on sustainability reporting and risks, with S1 being a general framework for companies in all industries around the world to harmonise sustainability reporting. The S2 framework will get deeper into the specifics of climate such as adaptation and mitigation, and is built off of the Taskforce on Climate-Related Financial Disclosures (TCFD) standards. These standards are expected to take effect in the beginning of 2024, with the first published reports expected in 2025. 

2. Embracing individuality this Pride month. Happy Pride Month! As Pride celebrations ramp up around the world, businesses must reflect on their own allyship to ensure they are creating an inclusive and welcoming environment both for employees and consumers. Virgin Airlines is a model example of walking the talk, as they eliminated gendered uniforms and make up requirements, mandated training on equity and inclusion for employees, and expanded their booking system to include titles beyond Mrs, Ms, and Mr. A survey of Virgin Airlines employees after these changes were made found almost 70% of respondents felt happier after being able to express themselves freely. Mental health and workplace culture improved as a result, with customer satisfaction increasing by 24%. Encouraging individuality rather than expecting conformity from employees and other stakeholders is proving to be highly beneficial for companies around the world. 

3. Board directors on artificial intelligence. Shannon Nash of Directors&Boards sat down with board members and C-suite executives of various tech and financial institutions to discuss artificial intelligence (AI). They shared that while AI is a powerful tool, effective governance needs to be in place first as it comes with significant risks, and that this responsibility falls to the board of directors. Boards must first determine how their company is using AI. Next, boards must identify the potential risks of that AI usage in order to develop risk mitigation plans. Finally, board members can also greatly benefit from AI usage. AI can analyse and present huge data sets very effectively, which is extremely useful for board meetings. Trend identification and analysis is another useful tool for board members that AI can assist with. As the field of AI is rapidly developing, boards will want to stay on top of new developments and technologies so they can appropriately mitigate their risk. 

4. Companies caught greenwashing risk lawsuits. Last week, a case was filed in California against Delta Air Lines with the primary complaint surrounding the fact that Delta promotes itself as being “the world’s first carbon neutral airline” and charging premium prices to reflect their carbon neutral status. The passenger in question chose to buy a more expensive Delta flight over other cheaper options due to the airlines’ claims regarding their environmental impact. She later discovered that Delta’s carbon offset system was unreliable and inaccurate, and is now seeking compensation for that misrepresentation. Ethical implications aside, this case shows that organisations who misrepresent their climate and biodiversity impacts run the risk of litigation. 

5. As AI replaces jobs, the sustainability profession grows. With recent AI developments such as ChatGPT, many are concerned that AI will replace human jobs in a number of industries. The World Economic Forum’s most recent Future of Jobs Report confirmed those concerns, as Goldman Sachs found that AI growth could potentially impact 300 million jobs and a Microsoft study concluded that over 75% of executives believed employees would need to upgrade their skills in order to compete with AI. However, green jobs in sustainability saw significant growth as three of the top ten fastest growing job posts on Linkedin were related to sustainability. Though the energy transition is expected to create over 30 million jobs, AI could potentially lead to the loss of 14 million jobs. Experience in sustainability is clearly a growing asset in the job market of the future. 

Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.

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