Board

Sustainability is the number one topic on which investors want to engage the board of directors during shareholder meetings. Investors are the most powerful stakeholders. When they want priority to be given to ESG (environment, social, and governance), should not the corporate board have members who have at least some form of expertise in ESG? Unfortunately, about 70% of board directors in a BCG-INSEAD Survey said their board was ineffective at integrating sustainability into governance and strategy building. Demands for sustainability coming not only from investors, but also from consumers, supply chain partners, government regulators, and employees are increasing year by year. It is only logical to have sustainability experts sitting on the board of directors of a company.

Rising importance of sustainability

A decade ago, a company focusing on sustainability would have a competitive marketing edge, but today it is more than that. It has become imperative for all companies to integrate ESG due to increasing demand by all stakeholders. Younger generations of consumers, especially millennials and Gen Z, are increasingly particular on consuming sustainable products, with 73% of Gen Z consumers saying they are even willing to pay more for them. Gen Z are also particular on working for companies adhering to sustainability: a Deloitte survey shows that 49% of Gen Z had made career choices based on personal ethics.

Many governments have become stricter after the Paris Climate Agreement, with many setting legally binding net zero emissions targets. The EU’s taxonomy, for example, will force change in companies operating not only in the EU but also in other countries around the world that have businesses in or trade with the EU. When making investment decisions, 85% of investors in 2020 looked at ESG factors. Sustainability is also about increasing financial returns as companies with an inclusive culture show a 22% increase in productivity and a 27% higher profitability.

Why sustainability experts are essential to corporate boards

Boards lack knowledge on ESG factors –Only 25% of board directors say boards understand ESG risks, which is disturbing when the world is shifting heavily towards sustainability. This year, the board directors of the oil giant Shell were sued for failing to prepare for a net-zero future. With so much on the line, the board needs to have the expertise on ESG. Unfortunately, in an INSEAD survey, only 47% of board directors felt that they have the required ESG expertise and competence to exercise board oversight on execution. Even having an ESG expert at the C-suite as a chief sustainability officer is not enough as ESG requires board-level attention and authority.

Fulfilling stakeholder demand – The calls for ESG have become louder and more proactive, fuelling stakeholder demand. Apple’s 2022 shareholder meeting saw Apple giving in to pressure by shareholders to do a civil rights audit. The world’s largest asset manager Blackrock backing climate activists to join the ExxonMobil board last year was another clear sign of the need for sustainability as a strategy at the highest decision-making authority in a business, which is the board. The voice for prioritising ESG also comes from supply chain partners, regulators, employees, and consumers. Not having an expert on the board and relying on the C-suite or outside consultants is clearly not enough in an evolving world demanding change on the environmental, social, and governance fronts.

Accountability requirements – Recent regulations by the US Securities and Exchange Commission regarding ESG information shows that there will be a need for aligning financial statements with ESG disclosures. At least one ESG expert at the board will need to be up to date with present and future regulations to oversee management’s fulfilment of compliance needs. Also, independent ESG auditors giving assurance is likely to increase with many standards converging under the International Sustainability Standards Board through which companies are looking to guide their policies.

Building strategy around sustainability – Like digital transformation, sustainability is embedded into all parts of an organisation. To stay relevant, the board needs to integrate sustainability into the company’s overall strategy. A report shows that 81% of board members prioritise strategic and operational ESG integration. To make long-term investments and strategic partnerships, a strategy is needed. More experts can shift the focus of the board towards integrating ESG into strategic planning and execution.

By Talal Rafi

Notes:

This blog post represents the views of its author(s), not the position of the European Commission, LSE Business Review, or the London School of Economics.
Featured image by Nastuh Abootalebi on Unsplash
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Author:Bill Hayes

Support the board by providing feedback and sharpening your listening skills.

The topic of becoming and remaining an effective director would seem to lend itself to a degree of selfishness.

“How do you develop yourself so that you can effectively serve on a board of directors?”

“How do you keep up with developments in the field so that you can continue to be of value to your company?”

However, being a proficient director is not always about how you prepare for or conduct yourself in the boardroom. Often, it can involve how you work to elevate other directors so that the boardroom unit can better serve the company.

Michael Montelongo, independent board director for Civeo Corporation and Conduent Inc., believes a high-performing board is more than a collection of high performers. It’s a cohesive group of servant leadership practitioners who feel they’re part of something larger than themselves, and communicate, collaborate and innovate as a team to make the organization better than they found it.

“Making that team chemistry work requires continuous individual and mutual accountability,” says Montelongo, who served as a commissioned officer in the United States Army and, later, as a senior Air Force official before embarking on a corporate career. “It is so important to give feedback, because in a culture defined by mutual trust and respect, your peers expect and appreciate it.”

Sanjai Bhagat, an independent board member for ProLink Solutions and Provost Professor of Finance at the University of Colorado Boulder, believes that the same level of frankness must be brought to the board’s relationship with the CEO. He relayed an anecdote from his time serving on the board of a company thriving in the digital marketing space. When the internet began to explode in the early 2000s, the company’s CEO thought it was time to invest in the World Wide Web. Bhagat was not convinced.

“I told the CEO, ‘You know something about digital marketing. What do you know about the Internet?’” says Bhagat. “All the other board members were saying, ‘It’s time to get into the Internet.’ I said, ‘There are a lot of things we can get involved in, but what competitive advantage do we have?’”

The board decided to go forward with investing in several internet companies, but within 12 to 18 months all had gone belly-up and the directors who had supported the investments had left the board. Meanwhile, during a trip around the golf links, Bhagat discovered the benefits of providing direct, authoritative counsel to the CEO.

“The CEO said, ‘Remember the meeting we had two years ago? You’re the only guy who was saying not to make those investments,’” says Bhagat. “‘And now you’re the only one I’m still playing golf with.’”

On one of his boards, Mike Airheart, a director for HUB Corporation and an advisory board member for Quartix, has received an interesting lesson in what it takes to be an effective leader: “Shut up and listen.”

Airheart is the only white male on the board of a small, minority-owned manufacturing company. This has taught him the value of learning from other people’s perspectives and experiences.

“You have the same trust-building issues you would in any situation, regardless of race, color or gender,” says Airheart. “But I’ve had to listen more and be a bit more aware of people coming from different backgrounds. It’s been a real learning experience. I’ve grown from the situation.”

While Airheart is in the minority on his board, he is not in fact from an underrepresented community. There is no doubt board members from underrepresented communities can struggle on boards because their perspective is not fully taken into account. Montelongo believes minority board members who are struggling to adjust to their boards must maintain the confidence that drove them to be recruited for the board seat in the first place.

“Don’t ever feel like you don’t belong. You are there because your insight, expertise and judgment are critical to your team’s success,” says Montelongo. “Listen, learn, grow and serve. I think if you apply that, you’re going to make a great first impression, and you’re going to be a valuable contributor to your organization.”

Author: Rebecca Bosl

Ever thought about becoming a member of a board?

Experienced C-suite leaders will often seek out board positions to expand their horizons, tackle new challenges and increase their value. Serving on a board is often a prestigious position and provides evidence of thought leadership and industry knowledge. As a bonus, many board members get paid for serving.

Finding a board to serve on is a journey and doesn’t often happen quickly. While some opportunities are posted, many are discovered through a person’s personal or professional network. While conducting a search for a board position might seem daunting and unfamiliar, in reality, landing a board position utilizes similar steps to landing a job.

Reviewing The Job Description

Job descriptions for board of directors’ seats vary. They often include some combination of the following skills:

• Related industry experience

• Strategic planning and strategy development

• Leadership

• Collaboration

• Financial expertise

• Ability to gain buy-in and consensus

• Problem-solving

• Fundraising

• Mergers and acquisitions

• Business transformation

• Operations excellence

• Turnaround expertise

Obviously, one person is not going to have all these skills. But you will want to highlight the skills that you do have by listing them in your competencies section and briefly describing your experience in the overview or summary section.

Writing A Board Of Directors Resume

Writing a resume for a board of directors position is similar to writing a regular resume. A board resume is typically one page in length, but it can be longer if needed to convey the candidate’s value.

As a first step, consider your audience. Those reading the resume are typically the nominating/governance chair of a board, and a recruiter might have the first pass at your resume.

Next, you want to view the job description to identify what qualifications the board is looking for in this position. You want to highlight your education, experience and key qualifications that match the position.

Here are some best practices you can follow for writing your board of directors resume:

• Title: Include the title of the board position you’re seeking and not an objective or “seeking” statement.

• Branding statement: Add a one-line branding statement at the top that captures the main value you bring as a board candidate (one to two sentences should do the trick).

• Summary/overview section: Highlight the main skills you bring to the role and the types of board roles you can fulfill. Be sure to mention other leadership roles, international experience and skills that assist in overall organizational leadership.

• Education and credentials: Highlight degrees and certifications that are relevant to the position.

• Professional experience: Cover each job on one line, noting title, company, city and years. As an option, add in a brief description of each company, noting type (public, private, nonprofit), industry and revenue (if applicable and if not confidential).

• Key qualifications: Only include competencies that are related to the position.

• Contact information: Include name, city and state, phone, email and LinkedIn profile URL.

• Directorships: Note any other board leadership positions including committee roles and positions including director or chair.

• Other items: Include relevant memberships, affiliations and awards.

• Activities: Add community service or volunteer positions.

• Photos: Leave the photos for LinkedIn and your executive biography. Resumes and board resumes should not include a photo.

Uncovering Available Board Of Director Positions

Finding board positions is like finding job openings in a regular job search. You’ll want to use multiple approaches to finding your board seat, just as you would in a job search.

First, you can directly reach out to organizations as you would in a targeted company search when looking for a job. You will also want to engage your network—as with a normal job search, your network may be the very best source of open board positions. Get on the radar of executive recruiters; sometimes they hear of board seats and may also recruit for the company.

You can also raise your profile as a subject matter expert by being involved in industry associations, speaking at conferences and posting thought leadership articles.

Several niche websites (listed below) assist with providing education and by posting board positions:

National Association of Corporate Directors

• Mission: Empower directors and transform boards to be future-ready.

• Provides NACD Directorship Certification to ensure qualification to serve in a director role and demonstrate commitment to staying up to date on current topics in corporate governance.

• Includes prospective director registry. This allows a board position seeker to create a profile that can be viewed by boards seeking new directors.

Private Directors Association

• Dedicated to improving private companies’ growth and sustainability; teaches board formation and governance; enhances private company value.

• Advocate for the value of diverse and inclusive boards.

• Posting service to help private companies gain access to qualified candidates through PDA’s nationwide membership for their fiduciary or advisory board roles.

Take the next step in seeking your board of directors position. Start looking for positions and create a tailored board of directors resume to target these roles. While the concept of seeking board of directors roles might feel daunting, remember it is similar to looking for a regular job.

Boardsi

Boardsi charges a membership fee to users. It is a modern recruiting company providing executives with board of advisor/director positions and provides companies with top executive talent.

In summary, pursuing board of directors positions can be an exciting new avenue for executives wanting to leverage their experience in helping other organizations achieve their goals. Create a tailored board resume, reach out to your network, gain some credentials and check specialized job boards. You’ll be well on your way to an exciting new career adventure.

If you’re a private company owner or shareholder, you may find yourself asking: How do I find highly qualified individuals to join my board? When a board seat is empty and needs to be filled, keep these three strategies in mind

Be Selective

Quality over quantity is key. It’s not just about filling all the seats at the table, but attracting people who can actually get the job done. Serving on a board is rewarding but time-consuming, and there is no room for passive membership when it comes to strategic decision making. Maybe you have interest from someone who intends to serve on as many boards as possible, something I like to call “overboarding.” No one benefits from filling a table with talking heads when a smaller, yet more productive team is what may truly be necessary to propel the corporation forward.

Ask yourself these questions:

Does my board simply fill blank space on the candidate’s resume?
Is this candidate guilty of being spread too thin?
Does this candidate add a key skill set or perspective to our team?

Diversify

It’s sad but true: Women and minorities are largely absent from corporate boards. Lack of diversity in the boardroom is a significant problem and affects us all in more ways than we realize. In fact, decisions made by boards of directors can impact you, your community, and the country. A diversified board ensures a variety of perspective that can come only from people with different backgrounds and experiences. It promotes a variety of viewpoints when it comes to leadership tactics, problem solving, and curating unique and thoughtful perspective on the organization as a whole. A board should mirror the company it governs, including its employees and customers. Lack of diversity is reason enough for boards to reassess their structure.

In fact, a report entitled Why Diversity Matters by McKinsey & Company found that companies in the top quarter for ethnic and racial diversity are 35% more likely to see financial returns above their national industry median. Interestingly enough, those companies in the bottom quarter for gender, race, and ethnic diversity are less likely to deliver above-average financial returns than the average companies in their national industry median.

From a gender perspective, a Catalyst report entitled The Bottom Line: Corporate Performance and Women’s Representation on Boards found that on average, companies with the highest percentage of female board directors outperformed those with the least by 53% for return on equity, by 42% for return on sales, and by 66% for return on invested capital. The writing is on the wall — diversity on boards is good for business.

Network

So how do you find qualified and diverse candidates? Often, it’s about whom you know, but what about those you didn’t realize you knew? Simply put, networking today is at your fingertips 24/7 thanks to social media, apps, and other networking tools. Online networking helps expand your network and serves as a helpful complement to traditional in-person networking.

But let’s not fully discount good old traditional networking. Face-to-face connections at events, conferences, and social gatherings can present a world of opportunity you may have never known existed. Opening up lines of communication to a second- or even third-degree connection could lead to an excellent fit for the board position you are looking to fill. New ways of networking enable us to step out of our comfort zones and create meaningful partnerships that take our organization to the next level.

Effective recruiting for your organization’s board is dependent on selectivity, diversity, and networking. The responsibility of the board member is to try to make a difference while hopefully gaining professional and personal satisfaction in the process. If there is ever an opportunity to be selective, assembling a winning board is it.

Author: Jeff Middlesworth CEO, Boardable

Today, the board of directors is responsible for appointing tech-savvy members and protecting the organization from risk. It’s no easy task.

In an era of rapid innovation, organizations and associations are vulnerable to more avenues for cybersecurity threats than ever. The boardroom is no exception. Jeff Middlesworth, CEO of Boardable, explains why an organization’s governing body must now rely on virtual meetings and document exchanges to enhance board management.

Since data breaches increased by 15.1% in 2021 compared to the previous year, mitigating cybersecurity risks is more critical than ever. Cybersecurity worries have only grown since Russia invaded Ukraine. More than half of companies reported cybersecurity as the most impacted part of their business since the beginning of the conflict.

Today, the board of directors is responsible for appointing tech-savvy members and protecting the organization from risk. It’s no easy task. Boards must:

Establish digital governance committees
Understand which security features to look for in a tech stack
Educate themselves with varying levels of technological know-how
Implement approaches that combine policy and technology
Leverage a fully secure virtual meeting platform

How Cybersecurity Flaws Affect Your Business

Cybersecurity flaws derive from competitors, foreign powers, hostile hackers and lack of security configuration. Yet as quickly as we develop new technologies to prevent hacking, cybercriminals find ways to exploit them via phishing, malware and ransomware attacks to gain access to sensitive, valuable data.

These threats increase a company’s odds of losing:

Business plans
Customer and employee data
Financial records
Intellectual property
Money
Product ideas

It takes an average of 287 days for businesses to detect a data breach. Companies should consider these threats and work with their board to develop defense plans.

How Boards Can Help Enhance Cybersecurity

While cybersecurity threats continue growing, so do effective solutions to prevent attacks. Boards can no longer sit by the wayside and let IT handle the brunt of the work. Maintaining cybersecurity is not just a technical problem but also an organizational issue. With the power to give companies the tools and guidance they need to prevent cyber risks, boards are now the first line of defense against online threats.

Mitigating cybersecurity risks now starts with board proactivity.

1. Digital governance committees

Establishing digital governance committees increases your company’s accountability and ultimately improves decision-making regarding maintaining cybersecurity. Digital governance committees must include individuals who understand the complexities of cyber risks and how to address them. Once boards recruit these digitally-savvy committee members, they should dig into the specifics of cybersecurity risks and — if necessary — how to manage them.

For example, the committee should prepare to answer the following questions:

What does a data breach look like?
What should we do in the event of a data breach?
What steps need to be taken to build cybersecurity?

Holistically, your digital governance committee should be able to distinguish outside threats and how to address them.

2. Security features

It has become critical for boards to understand their company tech stack’s security features. With malware attacks increasing 358%, ransomware attacks increasing 435% and phishing attacks accounting for over 80% of security incidents, companies must prioritize effective cybersecurity technology, processes and protocols.

Perimeter security technology — a shield for your business — includes web application firewalls, spam filtering, content filtering and antivirus software. Authentication tools also keep unwanted guests from snooping on your business data. Multifactor authentication requires a secondary method or device to authenticate users. Other security measures, such as password management, need employees to update their passwords consistently.

Finally, boards must evangelize and encourage companies to implement backup and disaster recovery tech. This technology allows businesses to retrieve lost information compromised by data breaches.

3. Educated board members

Adding just one board member with cybersecurity knowledge helps colleagues disseminate crucial information about prevention and risk management.

During each meeting, boards should also allocate time to discuss current cybersecurity risks and preventative strategies. By dedicating time to discuss risks, board members have the opportunity to raise questions and carve out their role in helping address cybersecurity threats.

Lastly, companies should include boards in all cybersecurity training programs. Plenty of training programs exist designed to increase cybersecurity literacy. Your business’s security goals and the board’s current knowledge level can guide you in choosing the right one.

4. Combining policy and technology

Instead of scaring boards into preventing cybersecurity threats, enlighten them on the importance of protection. For example, boards should encourage IT departments to set strict employee password requirements and use password management technology to store and update passphrases.

Social media remains the king of the internet. Boards must also set social media limitations for those within the company. Restrictions include prohibiting employees from sharing sensitive business information online or using social media during work hours.

Despite the growing popularity of remote and hybrid work environments, boards must consider developing and implementing policies dictating how, where and when employees can access their business devices. Additionally, boards should set restrictions on removable devices — or, if required — IT departments must perform virus scans before devices connect to business systems.

Many companies are implementing a zero trust framework that requires all users to be authenticated and authorized before being given company data and app access. Boards should also consider a zero trust framework to prevent unauthorized access from unauthorized users.

5. Secure virtual meeting platforms

As more businesses communicate digitally, they must prioritize maintaining security across virtual meeting platforms. With tools like agenda builders, minutes makers, document centers, polls and voting, and messaging protected by robust security measures, the right virtual meeting technology allows companies to communicate effectively and securely.

When vetting a virtual meeting platform, boards must choose one with administrative, technical and physical safeguards to protect sensitive data. Also, ensure the platform complies with General Data Protection Regulations.

Data breaches cost companies an average of $4.35 million per breach. That number should raise eyebrows no matter how large or small the business. A multimillion-dollar data breach drains assets and puts companies on precarious financial footing.

But failure to prepare for these threats goes beyond monetary value. Businesses lose customer and employee confidence with each data breach – their sensitive data is at risk. Companies suffer significant reputational damage. It takes companies months – sometimes years – to recover from the consequences of cybercrime.

Prowling cybercriminals often remain undetected for months. Don’t wait to prioritize cybersecurity. The best time for boards to take the necessary steps to enhance their company’s security is now. The health and well-being of their company depend on proactive cybersecurity measures. Boards are pivotal in helping IT, and security teams build a protective layer around their digital assets and set security standards for the entire organization.

“The Covid-19 pandemic has triggered a change in the skills in demand for board members, a new study has found. According to the Director Sentiment Monitor research published by the Institute of Directors (IoD) in Ireland, almost a third of business leaders say the pandemic has altered required skillsets and expertise for their board. Among the skills expected to be in demand in the coming two years are environmental, social and governance (ESG), innovation, cyber security and digital expertise.

“The pandemic has impacted just about every business in Ireland – as it has the rest of society – and this movement in relation to requisite board members’ expertise and experience reflects this. So, while a majority (65 per cent) of our survey respondents says the requisite skills and experience on their primary board have not changed during the Covid-19 pandemic, a significant one third of the business leaders say they have changed,” said Maura Quinn, chief executive of the Institute of Directors in Ireland.

Awareness

“The shift certainly reflects a post-Covid heightened awareness of environmental, social and governance issues, but also sees innovation, cyber security and digital expertise as enhancing rather than replacing more ‘traditional’ competencies such as strategy, corporate governance and risk management.”

The majority which was 81% felt their boards had the range of skills and experience necessary to drive the business and mitigate significant risks.

Strategy, corporate governance, sales, marketing and business development remained the most common skills board members believed they brought, with innovation, cyber security and data protection among the less common skills.

However, ESG and innovation were among the top three skills that respondents said would be the most desired and needed over the next two years. Cyber security and digital skills rounded out the top five, with marketing, sales and business development skills dropping to sixth place. Business continuity planning also fell down the list of in-demand skills.

It is worth noting, too, that the crucial importance of strong business continuity planning expertise also came to the fore during the pandemic, and it served those organisations well that incorporated it into their boards’ strategic planning and risk management functions.”

Retrieved from https://www.irishtimes.com/business/companies/pandemic-triggers-change-in-in-demand-skills-for-board-members-1.4681090

Board /

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Rising importance of sustainability

Why sustainability experts are essential to corporate boards

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Support the board by providing feedback and sharpening your listening skills.

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