Governance Matters podcast: Engaging directors in tackling the climate crisis

“Boards decide whether they want to go the phoenix or the dodo route,” says Veena Ramani, research director at FCLTGlobal, paraphrasing BlackRock chairman and CEO Larry Fink in the latest episode of the Governance Matters podcast. .

A major obstacle to tackling climate change is the short-term view that many companies – and investors – still take when it comes to meeting quarterly market expectations for financial performance. This contributes to an emphasis on change and the pursuit of strategies that do not fully consider the risks and opportunities beyond the immediate horizon.

One group seeking to change this is FCLTGlobal, a non-profit organization whose goal is to focus capital for the long term to support a sustainable economy. Ramani is an expert in corporate governance, climate change and ESG issues. She joined the organization in 2021 after spending 15 years at Ceres, during which her work included launching a program on corporate governance and creating an online ESG training program for directors.

Ramani, who was a judge for the recent inaugural ESG Integration Awards, told podcast host Jeff Cossette that she’s seen a shift in attitude among directors on climate change. “One of the main reasons is that the impacts of climate change are clearly visible all around us,” she says. “The consequences of climate change on the transition also surround us. [They and] Climate change transition costs are the risks a business faces as the market context changes.

Ramani points to a combination of other factors such as capital flows, global politics and even litigation as factors prompting boards to pay attention to climate-related risks and opportunities. She also notes that demonstrating expertise in the field makes directors attractive candidates to join other boards.

According to a study by the Corporate Secretary, 65% of mega-cap governance respondents say investors have asked about their board’s ESG skills. (You can access the full research report by clicking here.)

Ramani says investors are not looking for directors with scientific expertise. Rather, she says, they look for directors who know and understand what climate change means and what it means in the specific context of the company they oversee. They also want to see people who can translate that knowledge into what it means to be a corporate director: the impact on strategy, capital allocation, risk and long-term value creation.

To learn more, download the latest Governance Matters podcast.

The Governance Matters podcast offers listeners insight into hot issues for corporate secretaries, general counsels and other governance professionals.

The series examines how the role of the corporate secretary and board has evolved over time, as well as how the landscape of governance continues to change. From ESG to entity management, shareholder engagement to technology, hear from award-winning governance professionals and leading advisors on the latest public company governance issues.

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Helen D. Jessen