The events of 2020 have reminded the business world of the real risk of local and global system disruptions. We have experienced it acutely with COVID19, but we are going to see it exacerbate as one-by-one we reach our planet’s boundaries and the Earth struggles to absorb our pollution and waste or provide us with the services which we have freely used and abused to date.

 

Structural shortages of water, uncontrollable fires, dangerous plastic pollution and biodiversity loss are some emblematic examples of this aggravation. The assumption that nature provides us with free and unlimited goods and services is economically stupid, socially unacceptable and legally dangerous.

 

Business has a critical role to play in moving past this mindset and coming back to its purpose of creating longterm and sustainable value for society. As the “guardian” of the interests of the company, it is crucial that Boards fully understand environmental issues, as well as the impact on their own strategy in order to build the company’s resilience.

 

If questions are not asked and companies are not prepared, an entire organization can be endangered due to system disruptions and physical risks. Similarly the clear understanding of new opportunities arising from the ‘new normal’ should be seriously considered by the board in order to knowledgably arbitrate between stakeholders expectations .

 

 

For a Board to tackle these issues systemically, they must understand the interests of each of their stakeholders (not just shareholders) and put sustainability at the centre of the company’s strategy, by establishing an Earth Competent Board.

 

The “earth-competent” board; whose members understand sustainability, ask the right questions to management, and are structured to exercise their fiduciary duties of care and diligence, is key to acting in the best interests of the company they lead and all the organisation’s stakeholders.

 

 

For a board to start genuinely playing its role in respecting natural and social capital as well as ensuring future resilience, it must firstly ensure sustainable development is consistently considered at Board committee level and be linked to the sustainability function of the company. Secondly the board composition should include members with necessary environmental and social experiences and skills, and lastly Board members must feel responsible to actively request all necessary information.

 

Board members should spend their time and focus accordingly following a yearly planned agenda, making enough room for stakeholders expectations and

discussions on sustainability and strategy. These issues cannot be rushed or side lined by short-term problems and crisis management. COVID19 has provided a glimpse of what we can expect more of in the future if we do not put our organisations on the right path. Business was never created to create only profit for shareholders in the short term, whatever the cost or impact on other stakeholders. Business exists to create real benefits, societal development and value, to be shared between all stakeholders in an equitable way.