By Ira Srivastava
1. Preparing for required assurance in ESG reporting. New ESG reporting regulations are being introduced around the world, and with them come new challenges. The EU’s Corporate Sustainability Reporting Directive, U.S. Securities and Exchange Commission, and the state of California’s regulations will require third party assurances. This means ESG reports will have to be externally scrutinised similarly to financial reporting. Companies can prepare by first reaching out to the assurers of their financial statements, and contact other assurance organisations to bridge the gaps. Internal audit teams can point out potential ESG risks and put processes in place to collect the necessary data. Many organisations are creating positions specifically to oversee ESG reporting and taking advantage of cutting edge carbon tracking and ESG reporting software.
2. What boards need to know about generative AI. ChatGPT and other generative artificial intelligence engines have been making headlines since their launch in November of 2022. Businesses around the world are exploring ways to integrate AI into operations. As such, boards must be educated on its usage and how best to implement it. Boards can use AI programs to collect and present data, but at the end of the day decisions must still come from board members. Despite technological advances, there are flaws in generative AI models such as inaccuracy, bias, a lack of nuance, and the fact that unlike board members they would not face liability for any issues that arise. Generative AI also learns from previous interactions, so the outputs and responses it will provide depend heavily on who or what it has interacted with in the past. Boards must approach AI with caution and take all of these factors into account.
3. BRICS, G20 expansion and the impacts on business. BRICS, a group made up of Brazil, Russia, India, China, and South Africa has expanded its membership to include Saudi Arabia, Argentina, Egypt, Ethiopia, Iran, and the United Arab Emirates. The G20 also expanded to include the African Union. These expansions mean that economies in the global south will hold more influence in global supply chains, boosting supply chain resilience and globalism. These coalition expansions will also boost funding to developing economies, creating new business opportunities in previously unexplored markets. However, this also creates new risks for organisations as a more globalised supply chain increases the chances of national crises impacting business operations.
4. The Dutch propose a coalition to phase out fossil fuel subsidies. Last week, Rob Jetten, climate minister of the Netherlands shared that he would begin work to create “an international coalition to phase out subsidies and tax breaks tied to the use of fossil fuels blamed for global warming”. This comes after global fossil fuel subsidies reached a record high of US $7 trillion in 2022 and a jump in fossil fuel combustion following the pandemic. Teresa Ribera, the energy minister of Spain, has expressed support for this coalition as countries prepare for the 28th annual Conference of Parties in the United Arab Emirates.
5. Indigenous issues front and centre in North America. September 30th was Canada’s National Day for Truth and Reconciliation, followed by Indigenous People’s Day on October 9th in the United States. In June of 2015, the Canadian Truth and Reconciliation Commission released a report of 94 calls to action to “redress the legacy of residential schools and advance the process of Canadian reconciliation”. While these calls to action are primarily geared towards governments, there are steps that businesses can take to advance reconciliation.
- Inclusive leadership actions: Review internal business operations and strategy to see where policies can be put into place to improve reconciliation efforts and participate in Indigenous community activities to build a relationship.
- Dedication to Indigenous business development: Build partnerships with Indigenous organisations.
- Transparent and accessible procurement: Take time to source and use products created by Indigenous-led companies if possible and promote them to stakeholders and shareholders.
- Cultural awareness and strengthening community ties: Develop internship and mentorship programs for Indigenous youth and learn more about Indigenous customs relevant to your businesses geography.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.
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