Make Sure Your ESG Claims Have Substance
Greenwashing — making false or exaggerated claims about your organisation’s environmental friendliness — won’t fly in Australia. Directors must engage more deeply with environmental issues.
Cybersecurity is More Important Than Ever
Make sure your board members have some level of cybersecurity expertise, or at least enough interest in the topic to ask the right questions when cyber concerns arise. Ensure your digital updates are easy for board members to use.
Workplace Safety Goes Beyond Physical Safety
How does your staff feel about its psycho-social well-being in the workplace? Employee wellness and mental health are more important than ever. Make sure your board is addressing employees’ needs in this area.
Webinar recap: Julie Garland McLellan, experienced board director, board governance expert, and author, and Martyn Chapman, chief product officer at OnBoard, explore 4 key trends we’re seeing in the boardroom this year.
Boards don’t operate in a vacuum. Rather, the business that takes place in a boardroom is largely influenced by myriad factors, including stakeholder and shareholder pressure, the economic environment, and the competitive landscape – among many others.
Each year, certain trends emerge that shape the way business is done in the boardroom. Now, at the midpoint of 2023, certain trends have become clear.
Recently, we sat down with Julie Garland McLellan, experienced board director, board governance expert, and author, and Martyn Chapman, chief product officer at OnBoard, to discuss the trends they’re seeing on boards worldwide in 2023. Here, we’ll provide an overview of 4 of those trends.
1. ESG and Responsibility for Greenwashing
For the past few decades, businesses have faced mounting pressure to prioritise environmental, social, and governance (ESG) issues. In this time, some companies have made real strides. Others have made claims, statements, or goals – without taking any real action to back them up.
Greenwashing will no longer cut it. Today, board directors are responsible for ensuring their ESG claims actually have substance.
“This is a trend that really has been growing since the 1990s,” said Garland McLellan. “But especially this year, with the focus on greenwashing and the actions that our corporate regulator here in Australia is considering taking against directors who come out with statements about their vision for environmental compliance or performance – but then don’t have concrete steps or a reasonable plan to achieve this.”
This can be challenging for directors. Directors are responsible for the accuracy of things they say – as well as the attractiveness of their corporate visual. “Those things often collide,” said Garland McLellan.
According to Garland McLellan, directors must “sit up and engage far more deeply with environmental measures.” They must ask questions like:
Companies in the United States also face pressure to address ESG issues. But at the same time, ESG has emerged as a domestic, political matter. “There’s pressure on organisations to find this balance between not getting caught in the crossfire of political matters that are occuring, while at the same time being responsible to their stakeholders,” explained Chapman.
Chapman offered 2 guiding principles boards must keep in mind.
Clear, two-way communication between the board and stakeholders is also essential. “Be very clear on who your key stakeholders are and be very strong in communicating with them,” advised Garland McLellan. “As directors, we always need to be thinking and paying attention to those stakeholders.”
For many board directors, ESG isn’t an area of expertise. “We’re starting to see a need for directors to rapidly learn things that might not be part of their experience or education,” said Garland McLellan.
These board directors must be willing and able to learn as much as they can – and be willing to ask for input and advice from those with deeper expertise. “Taking advice when you don’t understand the topic matter yourself is a skill in and of itself,” explained Garland McLellan.
2. Cybersecurity and Digital Business Models
For many boards, cybersecurity is a growing focus. And for good reason. A cyberattack can be extremely damaging – not to mention costly.
Chapman says there are “4 key areas boards need to be thinking about,” which include:
According to Chapman, it’s essential to ensure you have the right expertise on your board. “Making sure the board has the right skill sets in its composition is critically important,” he said.
Garland McLellan agreed that cybersecurity is hugely important. “It’s not a question of if, but when and how badly,” she explained
However, she believes boards “shouldn’t look at cybersecurity until you look at how your organisation is using digital technology.” She goes on to say boards must examine factors including:
According to Garland McLellan, cybersecurity is, at least in part, a “social problem.” Organisations must take an honest look at what they’re doing that makes it hard for staff to do what they’re supposed to do. For example, if employees are provided with a collaboration tool that isn’t easy to use, they may opt to use something else that’s less secure – thus introducing risk.
Chapman agreed. “If you don’t have an environment where everyone can communicate securely, they’ll find something else. There are a lot of tools people can just sign up for free. You’ve got to get ahead of what people are using.”
3. Corporate Culture and Psycho-Social Wellness
Workplace safety has always been important. But today, the definition is evolving.
“Boards have been put on notice that the psycho-social well-being of their staff is their responsibility and that psycho-social harm is considered to be a workplace injury,” said Garland McLellan.
Many boards struggle to measure and address these issues properly. Listening to what people say and paying attention to each worker is important. But the larger the company, the more difficult this is to do.
In addition, Garland McLellan said that, “performance management systems are starting to crop up as something that’s causing psycho-social harm.”
According to Chapman, the pandemic reshaped the role of the board in employee wellness and mental health. “When it comes to well-being, the board’s role has increased,” he said.
Employee and workforce engagement has become a higher priority for boards. According to Chapman, “not addressing some of these matters becomes a competitive hurdle.”
4. AI and the Ethical Landscape
The public is adopting artificial intelligence (AI) at a rapid rate. For boards, the challenge is to leverage this technology in a way that doesn’t compromise security or ethics.
“Keeping on top of this for boards is incredibly difficult,” said Chapman. “There’s a lot going on with it. There’s the pace of change, and so much societal adoption. And businesses are under pressure to remain competitive.”
Chapman’s recommendation is for boards to look at AI in 3 ways:
AI is an area where boards may lack expertise. Education is essential.
“Set up a dedicated session for the board to have someone from within management or a guest speaker talk about the foundations and basics of AI,” Chapman suggested. “Make it very accessible.”
While AI is powerful, it’s important to remember it’s far from perfect. The challenge is for directors to recognise these limitations – and strive to leverage AI in a way that’s ethical.
Garland McLellan recounted a time where she tested out a visual AI tool. She uploaded a photo of herself, and asked the tool to make her look like a board director. The tool transformed her photo into that of a man.
“There are a lot of questions that are coming up,” said Garland McLellan. “How do you take the bias out of the historical data without destroying the scientific rigor?”
Chapman reminded attendees that “we definitely need to be mindful of the technical limitations of AI. The phrase ‘responsible AI’ will become increasingly common. A lot of work is being done on that.”
Is cybersecurity a focus on your board? If so, save your spot for our next ATLAS Leadership Webinar, Cyber-Ready Leadership: Directing in the Age of AI and Cyber Risk, featuring cybersecurity expert Chris Hetner, distinguished board director Betty DeVita, and leadership guru Stuart R. Levine.
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