How to move boards from climate ambitions to actions?

With climate action on center stage, Boards have a large role to play in making an impact on corporations. At the same time this is not as easy as one may think, because the corporate world as we experience now is still driven by capital flows and hence shareholders and therefore the relentless need for growth and profits.?

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While a drastic shift in behavior may not be immediately possible, there is a need to be able to handle dichotomy and do both well.?

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In a world driven by shareholders and capital, firms always had to contend with seemingly conflicting choices but have over time learnt to manage both and keep the shareholders happy. So at the beginning?there was the debate around increasing production versus improving quality. The belief was that as you rushed to make?more?and ship?more, you had to settle for lower quality. Japanese firms taught us that both could happen together. Not only that, over time it was possible to improve quality continuously and consistently while raising production.?

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In the last decade or so the debate was around Growth vs Profits. The assumption was that if you had to grow, then you have to at many times buy growth or market share and this would have to happen at the cost of profits. This dilemma was also overcome and firms have learnt the art of profitable growth.?

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The current dilemma is around profitable growth versus protecting the environment and keeping the planet healthy. The answers are not out there entirely but directionally we do see positive movement. One set of actions is to create opportunities for profits in areas that lead to positive impact on the environment. We now see that there are several VCs / PE firms that are?more?open to ventures that are serious about planet and conservation than only about profitable growth. This is a start no doubt and I am hopeful that creative minds will think of more measures.?

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Board members may need to be sensitized about such PE/VC behavior and therefore develop the ability to guide the management of firms that they oversee. The Board may also have to pull its weight in engaging with shareholders to adopt a?more?balanced perspective. What do I mean by this? If you notice, family owned and managed businesses are not subject to the diktats of the market and the larger base of shareholders. They can easily take calls that are planet friendly and less shareholder friendly. Take for example the Godrej group headquartered in Mumbai, India. They are able to preserve the mangroves in Mumbai even though the land they own, where the?mangroves are, can be monetized stupendously. Likewise there are many smaller family owned businesses in India and across the world that take calls basis the word ENOUGH!!!?

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How can Boards based on the above, become the torch bearers of coaching the shareholders on the philosophy of ENOUGH. How can they help restructure the capital of the firm, so as to allow this to happen? These are some areas that Boards need to think long and hard?on.

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Of course Boards can also, on an ongoing basis seek to alter behaviors in the day to day work. Plastics, renewable energy adoption, minimizing e-waste, reuse where possible etc can be part of a checklist that Boards can use to remind management and ensure behavior change.

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At this time a step change seems hard but a good beginning has been made and who knows in a couple of years we would have overcome this dichotomy as well.

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My Other Engagements --

Member - Institute of Directors

Adjunct Faculty - MYRA Business School

Member - CII Western Region Taskforce on Education

CXO Advisor - Subex