Executive Summary
In the months preceding the United Nations’ Climate Change Conference, COP26, which took place October 31–November 12, 2021, the INSEAD Corporate Governance Centre and Heidrick & Struggles conducted a global survey of board directors. Our goal was to investigate how boards understand and are coping with the process of decarbonization and how far climate change has been integrated into their oversight responsibilities. In publishing the findings summarized below, we aim to provide fact-based, honest, and practical support for directors and their companies on the journey toward net zero.
Overall, the results of our survey revealed a clear disconnect between what board members say about the importance of climate change to their companies and what the boards actually do.
What the report revealed about boards' readiness in addressing climate change
Climate change is now a firm fixture on board agendas.
75%
Climate change is very or entirely important to the strategic success of their companies.
63%
The board has a very or entirely clear understanding of the strategic risks and opportunities presented to the company by climate change.
60%
The board is very or entirely aligned on the importance of climate change and what to do about it.
72%
They are confident their company will reach its climate change goals.
However, when we asked about specific measures for addressing climate change, the outlook was less rosy.
43%
Companies do not yet have clear targets for reducing carbon emissions (or did not know if this was the case).
16%
Companies have targets for carbon emissions beyond their own control (that is, including their suppliers' and end users' emissions).
16%
No one in their company is responsible for reporting on climate change to the board (or they did not know who was).
50%
They are not yet very or entirely satisfied with their company's reporting to the board on progress in addressing climate change issues.
Climate change knowledge is not prioritised as a required competency for board and CEO selection.
69%
Climate change knowledge is not a formal requirement for joining their board.
69%
Climate change knowledge is not included in their board's competency matrix.
65%
Knowledge of climate change is not a formal requirement in CEO selection.
74%
Climate change is not at all or only slightly integrated into executive performance metrics (or they did not know whether it is or not).
Recommendations for Boards
Include climate change in the board's competency matrix and make sure the whole board has enough knowledge.
Add more relevant voices to your boardroom.
Change the board processess and dynamics - a responsibility for the chair.
Anchor your climate change strategy in social and organizational purpose and connect it to specific operations.
Integrate climate change objectives into executive compensation and search strategies, especially for the CEO.
This research study is jointly developed by:
Acknowledgments
The authors wish to thank Monica de Virgiliis, board chair, Chapter Zero France; the INSEAD Corporate Governance Centre team; and the Heidrick & Struggles team for their contributions to this report. They also wish to extend thanks to all those who responded to the survey and contributed to the realization of this study.
