By Ira Srivastava
1. Third-party suppliers can increase cyber risk. A new ISS-Corporate report reveals that third-party cyber risks have escalated to near-catastrophic levels. One-third of recent cyber incidents at Russell 3000 companies were traced back to suppliers or other third parties. The report emphasizes that 90% of these companies rely on common third-party technologies, creating shared vulnerabilities. A breach within any of the over 1,000 shared supplier-technology connections could have devastating consequences. To mitigate risk, boards should evaluate both direct and upstream (fourth-party) suppliers. Strategies include cybersecurity audits, vendor assessments, and minimizing over-dependence on specific vendors. Close collaboration between board members and IT leaders is critical. The report recommends continuous cybersecurity education for boards, regular briefings, and in-person workshops.
2. Sustainable investment strategies on the rise. Private equity managers are increasingly adopting ESG standards, with the prevalence of strong ESG processes growing from just 27% a decade ago to 73% in 2024, according to the latest ESG Report by LGT Capital Partners. This trend underscores the rising importance of sustainability in investment strategies and portfolio management. Europe is leading this shift, with 51% of private equity managers earning an “excellent” ESG rating in 2024, up from 42% in 2023. This solidifies Europe’s position as a frontrunner in ESG performance, while progress in Asia and the US is more gradual, with only 34% and 16% of managers, respectively, achieving top ratings. The report also highlights a notable increase in Diversity, Equity, and Inclusion (DEI) awareness. In 2024, 74% of private equity managers had established formal DEI policies, a significant rise from 60% in 2022.
3. Ford hits reverse on DEI. Ford Motor is the latest company to scale back its diversity, equity, and inclusion (DEI) initiatives. Over the past year, the automaker reassessed its DEI policies in response to the evolving legal and social landscape. Ford’s move follows similar actions by companies like Tractor Supply, which severed ties with the Human Rights Campaign (HRC) and retired DEI targets, as well as Lowe’s and Harley-Davidson, which also stepped back from DEI efforts. These companies cited conservative backlash and a desire to appeal to rural or conservative customers.
4. Marine biodiversity takes a hit. Researchers now estimate that 12.7% of marine teleost fish species are at risk of extinction, a significant increase from the previously reported 2.5% by the International Union for Conservation of Nature (IUCN). Researchers used a machine learning model combined with an artificial neural network to predict extinction risks, finding that species with small geographic ranges, large body sizes, and low growth rates are particularly vulnerable. Hotspots for these threatened species include the South China Sea, Philippine and Celebes Seas, and the west coasts of Australia and North America. The study highlights the need for increased research and conservation efforts, and for integrating AI-driven predictions into conservation strategies.
5. Australia implements new climate disclosure law. The Australian Senate passed a bill mandating climate reporting for large and medium-sized companies, marking a significant step towards a new climate risk disclosure framework. This legislation aligns with the International Sustainability Standards Board (ISSB) guidelines, requiring companies to disclose climate-related risks, opportunities, and greenhouse gas emissions across their value chains. Part of the Albanese government’s Sustainable Finance Roadmap, this initiative aims to develop financial markets to support the transition to a net-zero economy. The new requirements will apply first to large public and proprietary companies with over 500 employees or significant revenues and assets, starting in 2025, followed by medium and smaller companies in subsequent years. The Australian Accounting Standards Board (AASB) is finalizing the climate disclosure standards, while the Australian Auditing and Assurance Board (AUASB) will develop assurance standards for these disclosures by late 2024.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.