Sustainability is no longer just about what’s material today. For boards, the real risk lies in what may soon become so. For the better part of two decades, corporate sustainability has been defined largely through the lens of ESG: environmental, social and governance. Boards became conversant in carbon disclosures, diversity statistics and governance scores. A sprawling infrastructure of standards and rankings has grown up around these metrics, with much of it focused on what regulators, investors or stakeholders wish to see. Yet the world has moved on. ESG, once a useful organising principle, now risks becoming a limiting one. As geopolitical tensions flare, technological disruption accelerates, and ecological boundaries are breached, it is increasingly clear that the sustainability conversation must expand. The question is no longer whether a given issue fits neatly into an ESG framework, but whether it threatens, underpins or reshapes the strategic viability of the business. Materiality and Its Discontents Two dimensions of materiality dominate current practice. Financial materiality asks whether a given issue, say water scarcity or labour unrest, could affect a firm’s balance sheet or share price. Impact materiality , popular in Europe and among mission-driven investors, goes further and asks how a firm affects the world around it. The first is shareholder-centric, the second stakeholder-focused. Both are valid; neither is sufficient. Relying solely on what is material today blinds companies to what may become so tomorrow. Equally, chasing every conceivable impact risks spreading resources thin and confusing moral purpose with strategic clarity. The prudent course lies somewhere in between: focus on the risks and dependencies that matter most, while staying attuned to how global conditions are shifting around the enterprise. ESG: Settling into a Role None of this requires discarding the underlying principles of ESG. It has helped institutionalise sustainability, imposed a degree of rigour, and clarified expectations in boardrooms and capital markets alike. For many firms, ESG reporting is now as routine as financial audit. That is no small achievement. But ESG is becoming, in essence, a compliance function - a way to meet disclosure requirements, placate stakeholders, and remain legible to investors. Its strength lies in structure; its weakness, in foresight. ESG is reporting and disclosure, and not designed to detect geopolitical flashpoints or the second-order effects of AI and emerging technology. Nor can it account for the subtler ways in which ecological degradation, financial contagion or supply chain concentration can ripple through a business. Boards would do well to treat ESG as a baseline which is necessary, but no longer sufficient. Scanning the Horizon The real work lies in horizon scanning . This means thinking beyond the balance sheet and imagining the conditions under which today’s strategy might falter. Not all risks are born equal, and not all come dressed in ESG clothing. Geopolitics , once the preserve of diplomats, now shapes everything from energy prices to semiconductor supply. Geoeconomics , including tariffs, export controls and industrial policy, increasingly determine where and how businesses can operate. Technological disruption , led by artificial intelligence, is redrawing competitive lines faster than governance frameworks can adapt. Environmental stress , including biodiversity loss and pollution, is becoming an input risk, not just a reputational one. Demographic shifts - aging populations in rich countries, restive youth in poorer ones, and mass migration between the two, will reshape consumer markets and labour forces alike. These may not be material in the financial sense - yet. Nor are most companies directly responsible for them. But the assumption that such factors lie outside the remit of corporate sustainability is increasingly untenable. Measurable, But Not Always Meaningful Much of modern corporate governance is built on the idea of measuring what matters. But in a world of deep uncertainty, what matters most may not yet be measurable. That calls for a change in orientation: from tracking indicators to interrogating assumptions; from managing known risks to stress-testing strategic blind spots. Boards should ask not only what their sustainability reports are capturing, but what they are missing . What geopolitical risks are lurking in the supply chain? What technologies could make today’s products obsolete? What ecological dependencies, taken for granted, could suddenly become liabilities? The best-prepared firms will be those that treat sustainability not as a quarterly disclosure exercise, but as an ongoing process of situational awareness. A Broader Mandate There is no shortage of frameworks. What is needed now is judgment. Directors should remain vigilant on financial and impact materiality, focusing on the issues that most affect or implicate the firm. But they must also recognise that the greatest threats are often contextual, not operational. To govern effectively in this new era, boards must look beyond ESG and ask a harder question: not “What are we measuring?” but “What are we missing?” -- NB: A useful guide on the foundations of scenario planning for boards was written by Trudi Lang of the University of Oxford’s Saïd Business School for ICAEW in 2022. Please find the link here .

On September 12th we hosted another roundtable in partnership with  The Cantellus Group  - it's CEO  Karen Silverman  and  Barbara Stymiest  of  CIFAR  were engaging with our participants on strategies and tactics.  Our key takeaways were: Emerging Importance of AI : AI and climate change are emerging as top concerns for organisations, with AI being recognised as a transformative general-purpose technology. Despite the fast pace of AI development, its business value and implications remain unclear to many, creating challenges for industries trying to adopt and govern it. Governance Gaps : Boards are largely unprepared for AI oversight. There's a growing need for board members and the C-suite to enhance their understanding of AI, ensuring that governance is consistent across different organisational levels. Voluntary board education is insufficient and tends to be generic at this stage. Shift from Risk Management to Resilience : Traditional risk management frameworks are becoming inadequate. AI and other global transitions (climate change, geopolitical shifts) demand a new focus on organisational resilience. This includes the ability to adapt to uncertainties and navigate risks that can't be managed traditionally. The role of the board is evolving from managing known risks to fostering an environment of agility and preparedness for uncertainties. Strategic Impacts of AI : AI will fundamentally change how companies deliver products, interact with customers, and compete. Boards must ensure that their organisations have the structures and processes to integrate AI effectively, fostering innovation at the frontline. Strategic pivots, driven by AI advancements, will become more common across industries. Frameworks for AI Governance : A governance framework for AI is being developed, with key pillars such as AI principles, literacy, governance structures, and tools for privacy, cybersecurity, and data governance. The aim is to create an environment where innovation can thrive while ensuring ethical and secure AI practices. Future Governance Models : Boards must adjust their decision-making processes to accommodate the dynamic challenges AI brings. This includes rethinking meeting structures, investing in AI readiness, and embracing new governance models that prioritise agility, industry-specific insights, and resilience. The discussion emphasised that AI governance is still in its early stages, but it is advancing quickly. Boards must be proactive in understanding AI’s implications for their specific industries, while also navigating a landscape filled with uncertainties. Please let us know if you are interested in reviewing the opening fireside chat: ga(at) sustainability-board.org AI & Sustainable Governance Roundtable

In today's global polycrisis, boards and executive teams alike must integrate a wider array of perspectives into their decision-making processes and align their businesses. A holistic approach that incorporates broader aspects of material risk is crucial for ensuring the resilience and sustainability of business operations. Here are key recommendations: 1. Expand Risk Assessments to Include Geopolitical Risks   Risk assessments must evolve to include geopolitical risks even if they seem outside of the normal scope of what would be considered. Traditional assessments may gloss over certain facets of political instability or international trade tensions, focusing more traditionally on sectoral, internal or regulatory issues.  But this scope can be too narrow in an interconnected world that is increasingly fragmenting. Consider the impact of the Russia-Ukraine War on sustainability strategies across Europe or the Houthi attacks on container ships in the Red Sea. The impacts of these events have caused significant supply chain disruptions which amplified protectionism as well as near- and friendshoring. This may de-risk supply chains but creates new volatilities like inflation due to price increases of goods and services.  By widening the board’s risk aperture, directors can gain a more comprehensive understanding of potential impacts on investments and operations. This broader evaluation perspective  is essential for anticipating and mitigating risks that could disrupt business continuity and resilience. Importantly, the risk assessment must not stop at the organisation’s edge but should include the full lifecycle of key products or services, including suppliers. Geopolitical instability can significantly affect value chains and could jeopardise the viability of key suppliers, many of which are small and mid-sized enterprises in emerging markets, which may have invested less in their resilience. It’s vital to ensure that business operations, whether in urban centers or rural areas, are resilient to major disruptions. For example, supply chains in politically unstable regions might face interruptions that could jeopardise the financial stability of the entire value chain.  Polycrises do not just affect emerging markets, but even developed countries in new and sometimes unexpected ways - a 2016 study in the American Journal of Public Health has shown that when temperature rises, violent crime increases, emphasising the link between a changing climate and human behaviour. Proactively addressing these risks through strategic planning and diversification can help secure value chains against risks such as geopolitical and conflict threats. 2. Accelerate the shift towards sustainable investing  Current geopolitical situations, marked by unprecedented challenges, also reshape how investors assess risks and opportunities. Sustainability and the fight against climate change are reframed as a means of achieving immediate security goals, rather than just a long-term environmental objective. The polycrisis has accelerated the shift towards sustainable investing, with global sustainable assets projected to exceed $53 trillion by 2025 and an annual investment of $6.9 trillion needed by 2030 to ensure infrastructure investment is on track to meet the world’s climate goals.  In this new economic paradigm, where ecological considerations are intrinsically linked to security, the companies aligned with the ecological transition and strategic autonomy may gain easier access to capital. Lenders are increasingly incorporating sustainability criteria into their lending decisions, reflecting both regulatory pressure and changing market dynamics. This is why a forward-thinking approach is necessary and will enable businesses to remain agile and responsive to emerging threats, ensuring long-term stability and ultimately, increased sustainability. 3. Addressing Insurance Market Challenges A comprehensive approach to risk management strengthens organisational resilience against both human-induced and natural threats. Just as wars may impact business strategy and continuity, the increasing frequency and severity of climate-related events, such as floods, rising sea levels, and wildfires, have rendered many areas uninsurable. Businesses must reassess their risk mitigation and investment strategies considering these developments given that some areas may soon be uninhabitable or subject to managed retreat.  Long-term scenario planning and strategic data modelling becomes indispensable here, allowing businesses to test and refine adaptation plans for various climate-related scenarios so that they can make proactive decisions. These include evaluating the long-term viability of protecting and insuring assets located in high-risk areas and exploring alternative risk transfer mechanisms   to include appropriate insurance coverage, indemnification in contracts, reciprocal agreements within industry, or risk shifting via credit derivatives. Conclusion Boards and executive teams must adopt a holistic approach to integrating risk and sustainability to build greater organisational resilience in an uncertain and complex operating environment. By doing so, they can ensure that their businesses are prepared for a wide range of potential disruptions.  In Summary: 1. Integrating Geopolitical Perspectives Broaden Evaluation Criteria Securing Value Chains Adaptation Planning   2. Addressing Issues Reassess Risk Mitigation Strategies Scenario Planning Broaden Risk Perspectives   3. Enhancing Organisational Resilience Insurance as a Tool Robust Adaptation Measures Reporting and Transparency You can download the memo in pdf below: About the Authors Chloe Demrovsky is the President of Edgewood Insights, Executive in Residence at NYU SPS Center for Global Affairs, and Senior Advisor at The Sustainability Board Fatima Hadj is a Member of the Net Zero Asset Management Advisory Board, and Chair of Securitised Products at PRI Frederik Otto is the Founder and Executive Director of The Sustainability Board About  The Sustainability Board The Sustainability Board (TSB) is an independent think tank and advisor, advancing sustainable leadership and corporate governance through research, thought leadership, executive education programmes, and an Institute for Sustainable Family Business. Learn more under: www.boardreport.org Keywords: Geopolitics, Sustainability, Leadership

The Sustainability Board considers AI a key systemic risk and opportunity and urges all business leaders to consider AI implications in their decision making and corporate governance. The below is a summary of the first significant regulation of AI. Regardless of industry, if you are a developer, deployer, or a specific other participant in the AI value chain, you not only have to stay on top of current sustainability and climate regulation but also the below. Synopsis The European Union's Artificial Intelligence Act (EU AI Act) is a landmark piece of legislation aimed at navigating the complexities and opportunities presented by artificial intelligence technologies. This regulatory framework is designed to balance the promotion of innovation with the safeguarding of fundamental rights and safety. Key Objectives of the AI Act At its core, the AI Act seeks to ensure that AI systems used within the European Union (EU) are both safe and respectful of fundamental rights. This dual focus aims to align AI development with EU values, ensuring that technological advancements do not come at the expense of human rights and safety. Additionally, the Act seeks to foster innovation by providing a clear and stable regulatory environment. By setting well-defined rules and standards, the Act aims to encourage investment and development in AI technologies, thus promoting economic growth and competitiveness in the global market. Scope and Applicability The AI Act applies to a broad spectrum of businesses involved in the AI ecosystem, including: AI Providers: These are businesses that develop and market AI systems. They bear the primary responsibility for ensuring that their systems comply with the regulatory standards set forth in the Act. AI Users: Companies that deploy AI systems in their operations must ensure these systems are used in compliance with the Act, particularly if they involve high-risk applications. Importers and Distributors: Those who bring AI systems into the EU market must verify that these systems meet the EU’s regulatory requirements. Manufacturers: Businesses incorporating AI into their products or services need to ensure compliance, especially for high-risk AI applications. Service Providers: This includes companies offering AI-driven services, such as AI-based software solutions and cloud services. Risk-Based Approach The AI Act adopts a risk-based approach, categorising AI systems into four levels of risk: Unacceptable Risk: AI systems that pose a significant threat to safety, livelihoods, and fundamental rights are banned outright. Examples include AI systems for social scoring by governments. High Risk: These systems have significant potential impacts, such as those used in critical infrastructure, education, employment, and law enforcement. They are subject to strict requirements before they can be placed on the market. Limited Risk: AI systems with specific transparency obligations fall into this category. Users must be informed when interacting with these systems, such as chatbots. Minimal Risk: These systems pose little to no risk and are not subject to additional regulatory requirements, allowing for greater flexibility in their development and deployment. Key Requirements for High-Risk AI Systems Businesses dealing with high-risk AI systems must meet several stringent requirements to ensure their safety and reliability: Data Governance: High-risk AI systems must be trained on high-quality datasets to ensure accuracy and fairness. Transparency: Clear and comprehensible information about the AI system’s functionality, capabilities, and limitations must be provided to users. Human Oversight: Measures must be in place to ensure that humans can oversee and intervene in the AI system’s operations to prevent or mitigate risks. Robustness and Security: AI systems must be robust, accurate, and secure to minimise errors and vulnerabilities. Implications for Non-EU Businesses The extraterritorial nature of the AI Act means that non-EU businesses must also comply if their AI systems have an impact within the EU. This includes companies that provide AI products or services to EU customers or process data of EU citizens. To ensure compliance, these businesses must: Appoint an EU Representative: This representative is responsible for ensuring that the AI system complies with the Act and acts as a liaison with EU regulatory authorities. Meet the Same Standards: Non-EU businesses must adhere to the same stringent requirements as EU-based businesses, particularly for high-risk AI systems. Implementation and Compliance Timeline The AI Act includes a structured timeline for implementation and compliance: Adoption of the Act: The European Parliament and the Council of the EU are expected to finalise and adopt the AI Act by late 2024. Transition Period: Following adoption, there will be a transition period of 24 months, allowing businesses time to prepare and align their operations with the new regulations. This means that the Act will become fully applicable in late 2026. Compliance Deadlines: By the end of the transition period, businesses must ensure that their AI systems comply with all relevant requirements of the AI Act. This includes completing necessary adjustments to data governance practices, transparency measures, and security protocols. Enforcement and Penalties The AI Act outlines significant penalties for non-compliance, which apply to both EU and non-EU businesses. These penalties include substantial fines and, in severe cases, the withdrawal of non-compliant AI systems from the EU market. This strict enforcement mechanism underscores the EU’s commitment to ensuring the safe and ethical use of AI technologies. Strategic Considerations for Businesses For businesses operating within or targeting the EU market, the AI Act necessitates a strategic approach to compliance: Regulatory Alignment: Companies must align their AI practices with EU standards to maintain market access. Operational Adjustments: Legal frameworks, operational procedures, and compliance strategies need to be adjusted to meet the Act’s requirements. Market Entry: Businesses must carefully evaluate the costs and benefits of entering or continuing operations within the EU market under the new regulations. Additional Resources European Parliament: Artificial Intelligence Act - MEPs adopt landmark law Akin: Final Approval of Ground-breaking EU AI Act Euractiv: Various Accenture: Responsible AI

Five years ago, we set out on a mission to advance sustainable leadership and corporate governance. As we reflect on this journey, we are both proud of our accomplishments and acutely aware of the challenges that lie ahead. The Sustainability Board  has evolved from a singular focus on reporting the state of global ESG oversight to become a comprehensive resource for policy, research, thought leadership, executive education programmes and trusted advisory services. Our new report serves as a comprehensive summary of our first five years, providing an overview of all our work and the milestones we've achieved. From our inaugural Sustainability Board Report in 2019 to the launch of TSB Global Advisors in 2024, these pages chronicle our evolution and impact. Download the report below:

On the 18th of July TSB Global Advisors hosted another private virtual roundtable with a group of 18 independent directors, executives, and chairs. The discussion was moderated by Executive Advisor Frederik Otto . Our guest speakers were  Chloe Demrovsky  and  Fatima Hadj who expertly summarised the nexus of risk, resilience and sustainability. Synopsis: 1. Integrating Geopolitical Perspectives Holistic Risk Assessment Broaden Evaluation Criteria:  Traditional risk assessments focusing solely on creditworthiness are inadequate. Incorporate geopolitical risks to capture the full spectrum of potential impacts on investments and operations. Securing Value Chains:  Ensure that business operations, whether in urban centres or rural areas, consider geopolitical and conflict. This is crucial for SMEs in emerging markets where instability can significantly affect financial stability Adaptation Planning : Use forward-looking scenarios to plan for macro shifts and incorporate these into risk mitigation strategies 2. Addressing (Insurance) Market Challenges Climate Risk Management Reassess Risk Mitigation Strategies:  With increasing areas becoming uninsurable due to climate risks like floods and wildfires, organisations need to reevaluate their risk management frameworks.  Scenario Planning:  Develop and test adaptation plans for various climate-related scenarios to ensure preparedness and resilience. This includes assessing the long-term viability of insuring assets located in high-risk areas. Human-Induced Risks Broaden Risk Perspectives:  Recognise that human activities, such as geopolitical conflicts, also significantly impact markets. Integrate these risks into your overall risk assessment and management strategies. 3. Enhancing Organisational Resilience Tools and Levers for Resilience Insurance as a Tool:  While insurance is becoming harder to procure, it remains a crucial component of risk management. Organisations must work to secure adequate coverage and explore alternative risk transfer mechanisms Robust Adaptation Measures:  Implement comprehensive adaptation strategies to deal with both climate and human-induced risks. This includes having contingency plans and diversifying risk management approaches to ensure operational continuity Strategic ESG Implementation: Focus on Core Business Risks:  Align your ESG strategy with core business risks to make it more credible and impactful. This includes setting achievable goals, delivering on promises, and grounding the strategy in business-relevant issues Reporting and Transparency:  Maintain transparency by reporting progress against set ESG targets. This helps build trust and demonstrates a commitment to sustainable and resilient business practices   Please send an email to ga@sustainability-board.org to request the link to the fireside chat recording. You can learn more about TSB Global advisors here .

To foster engagement with material sustainability issues in the future, companies need to ensure leaders are skilled and ready. G eopolitical events over the last two years, coupled with the rise of generative artificial intelligence and an economic system that follows few rules from the past, have shifted the priorities of business leaders worldwide. These factors have also put a strain on sustainability initiatives and priorities. But what exactly  is  sustainability again? Let’s define it as the aim to sustain or improve the current state of planet and society (including business). In this context, most short- and long-term issues are captured within ESG frameworks. These issues vary significantly across different industries and geographies and go far beyond just climate change and diversity & inclusion. According to the Sustainability Accounting Standards Board, the material sustainability issues for a software company, for instance, include energy management, customer privacy, data security, employee engagement, diversity and inclusion, competitive behaviour, and systemic risk management. These are certainly all key business drivers and, for board directors, understanding them is critical to fulfilling their governance roles effectively.   The board’s responsibility is to ensure that sustainability is integrated into the core business strategy. This involves asking the right questions and providing strategic guidance to management on risks and opportunities related to sustainability. Directors must have a foundational knowledge of these material issues to oversee and steer the company toward sustainable practices. Current state of ESG engagement Despite the obvious importance of sustainability, many boards still lack sufficient ESG-engagement. According to The Sustainability Board’s research, fewer than half of committee members and chairs responsible for sustainability oversight at global large cap corporations  demonstrate meaningful engagement  with material sustainability issues. The pressure for boards to enhance their ESG capabilities varies globally. Regulators everywhere have stepped up reporting and disclosure requirements significantly. In Europe, where regulatory pressure is the highest, asset owners and managers also have sophisticated expectations regarding board accountability for sustainability risks, articulated in stewardship guidelines. Conversely, businesses in the US face amplified reputational risks due to social and political polarisation, necessitating robust policies and issue management strategies. Meanwhile, boards in emerging markets exhibit a growing, albeit nascent, willingness to improve sustainability governance without much outside pressure.   Board sustainability expertise To effectively engage and upskill the board in sustainability issues, it is helpful to reassess the traditional board skills matrix. Distinguishing between baseline ‘ESG consciousness’ (capturing foundational knowledge) and more advanced ‘ESG competence’ (enabling effective strategic action) is a wise starting point. Too many boards still make do with a tokenistic sustainability checkbox, rather than digging into each director’s actual experience. Admittedly, establishing these profiles can be challenging, as it requires balancing fiduciary responsibilities with specific sustainability knowledge. However, this comprehensive approach offers key benefits: Depth of expertise : Understanding the existing sustainability knowledge among directors and identifying gaps resulting in a more robust governance system. Stakeholder assurance : Demonstrating the board’s commitment and leadership in sustainability matters to pre-empt challenges from stakeholders and shareholders. Strategies for knowledge acquisition As boards strive to enhance their ESG engagement, they must also focus on the resources needed for continuous learning and development. Boards have several options to consider: Appointing new directors : tasking search firms to find directors with track records of material ESG-engagement through succession planning and new appointments Internal and external advisory boards : leveraging advisory boards for continuous insights. These can be ‘horizon boards’ made up of younger generations, or external domain experts, or both. External advisers and workshops : Regular input from external advisers and participation in collective upskilling exercises, such as workshops and retreats. Certification and training programmes : requiring certifications from specialist education providers and clearly articulating the necessary engagement levels for new directors. Lastly, board effectiveness reviews and benchmarks should incorporate these expanded skills requirements, ensuring that board functioning aligns with the business’s sustainability agenda. By elevating the board’s expertise in sustainability issues, companies can better navigate the complex challenges and opportunities that lie ahead.   This article was first published in Board Agenda .

As part of the Sustainable Leadership Preparedness Programme, we hosted a private virtual roundtable on the 16th of May with programme members and selected guests. Our expert speakers Paul Druckman of the World Benchmarking Alliance and Veronica Poole of Deloitte were discussing Sustainability Materiality, Standards and the Future of Disclosures with our 15 participants, all high-profile board director and/or chairs. The key takeaways were: There is currently a fragmented landscape of sustainability reporting standards and regulations globally, including from ISSB, EFRAG (CSRD), SEC, SASB, GRI, and others. Consolidation and harmonisation are needed. The concept of "interoperability" between standards is being explored, as well as the idea of having standards deemed "equivalent" across jurisdictions to allow multinational companies to use a consistent global baseline. There may need to be three sets of global standards - financial reporting (IFRS), sustainability disclosures focused on capital markets (ISSB), and stakeholder/impact reporting standards (like GRI). Upcoming reporting requirements like the EU's CSRD present major strategic decisions for companies around reporting boundaries, materiality assessments across subsidiaries, integration with financial reporting, assurance readiness and more. For boards, sustainability engagement is about influencing behaviour and considering the company's purpose and impacts, not just compliance. Boards need to ensure robust governance, controls and assurance over reporting processes. Paul Druckman is a Non-Executive Chairman and Director of organisations in multiple sectors. He is Chairman of the World Benchmarking Alliance and a Trustee of many organisations including Accounting for Sustainability which was established by King Charles III. He is also an Advisor for Workiva and on its ESG Advisory Committee. Paul is a Chartered Accountant who built his own software company before becoming a non-executive director for companies including being Chairman of the Board of Clear Insurance Management Group and the Access Group. Highlights in the past have also included being President of the Institute of Chartered Accountants in England & Wales (ICAEW): the founding CEO of the International Integrated Reporting Council; a Board member of the UK government regulator (FRC) and Chairman of UK accounting standards. Veronica Poole is a vice chair of Deloitte UK, Global IFRS and Corporate Reporting leader and NSE Head of Accounting and Corporate Reporting. She leads Deloitte’s contributions to the World Economic Forum IBC Stakeholder Capitalism Metrics, and has facilitated the work of the leading sustainability standard-setters to develop a prototype climate standard, helped launch the UK Directors’ Climate Forum—Chapter Zero, and spearheaded Deloitte’s partnership with the A4S Finance for the Future Awards. Request access to the recording by sending an email to SLPP(at)sustainability-board.org Learn More about The Sustainability Board’s Sustainable Leadership Preparedness Programme (SLPP).

TSB Global Advisors hosted a virtual roundtable on the 13th of June 2024 with Executive Advisor Frederik Otto and Senior Advisor Beatriz Araujo, World Economic Forum Governance Expert and former Head of Corporate Governance at Baker McKenzie. The outcome of the call was a global view on structuring sustainability oversight at the board level with a focus on stakeholder engagement and governance. The key takeaways were: ESG Oversight and Stakeholder Governance: Companies must balance shareholder returns with stakeholder engagement for long-term success. The governance framework should help in better decision-making and compliance. Director Duties and Stakeholder Governance Framework: Directors owe their duties to the company itself, ensuring its long-term success and considering stakeholder impacts. The UK Companies Act explicitly requires directors to consider stakeholders in their decision-making. Practical Implementation of Stakeholder Governance: The aim is to ensure stakeholders' voices are heard in material decision-making. A materiality assessment is essential for understanding which stakeholder issues are most relevant. Effective stakeholder governance involves more than just formal reports; it requires meaningful engagement and consideration. Beatriz Araujo is a Senior Advisor at TSB Global Advisors, World Economic Forum Governance Expert, and former Head of Corporate Governance, Baker McKenzie. Until July 2023, Head of Corporate Governance (Legal 500 Band 1 team) at Baker & McKenzie based in the Firm's London office who has also served on the Firm's global Board, the Executive Committee. More than 35 years experience as a transactional and corporate advisor. Expertise in Corporate Governance and ESG. In October 2009 I was elected by the global partnership to serve full time for a four year term on the Firm's global Executive Committee (EC). Prior to my election to the EC, I was a member of the London office's Board/Management Committee. Baker & McKenzie's Strategy Officer at the World Economic Forum 2012-14. World Economic Forum Fellow since June 2020. Author of two White Papers of the Wrld Economic Forum in collaboration with Baker McKenzie. Co- Chair of World Economic Forum Global Future Council on Responsible Investing. Member of World Economic Forum Climate Governance Community of Experts. Request access to the recording by sending an email to GA(at)sustainability-board.org Learn More about TSB Global Advisors.

On Sunday the 26th of May 2024 the Harvard Law School Forum on Corporate Governance has featured The Sustainability Board's (TSB) latest report: Sustainability Board Preparedness in Large Public Family Businesses. The report is the first research of the new Institute for Sustainable Family Business at TSB. The foreword was co-authored by Executive Director Frederik Otto and the institute's Director and Senior Advisor Michael Reed, a former executive of Royal Bank of Canada. "Our continuous features on the prestigious Corporate Governance forum of the world's most prominent law school is a testament to the high quality work of The Sustainability Board" says Otto. Otto notes: "Although TSB does not have a focus on the legal interpretation of director's duties or corporate law, we see lots of interest from lawyers and legal advisors to understand sustainability issues better and how they affect corporate decision making. More newly discussed topics such as biodiversity loss, AI, geopolitics and the boards's oversight of such issues will be an area of growing interest." TSB is committed to inform and improve sustainable leadership and corporate governance through research, thought leadership, educational programmes, and advise. View TSB's latest post on the forum View all TSB posts on the forum

Synopsis In times where a focus on sustainability governance/ESG is a key item for investors, other stakeholders and boards alike, it is useful to expand on the traditional board skills matrix. The key benefits are: Understanding the depth of directors’ sustainability experience and where additional skills are required Showcasing the experience and leadership of the board in sustainability matters (if applicable) An opportunity for developing an expanded view of a boards’ skills matrix could be when in the process of succession planning, or when looking for new directors or committee chairs with specific sustainability knowledge. When considering directors’ skills we recommend distinguishing between two levels of ESG-engagement: Download the full memo below: Short Live Webinar Thursday, June 6th, 9.30am ET / 2.30pm BST / 3.30pm CET – 30 minutes In this live webinar we will discuss how to identify the right skills and behaviours in directors, the upskilling journey, and the blurred lines between knowledge on the board and outside advice. Join Frederik Otto of The Sustainability Board & TSB Global Advisors, and Helen Wiseman, Non-Executive Director & Committee Chair of several boards globally, and President of the INSEAD International Directors Network. Watch the recording

In a move to harness the unique potential of family businesses to drive sustainability, The Sustainability Board today announced the launch of the Institute for Sustainable Family Business (ISFB). The institute's mission is to equip family business owners, executives, and boards with the tools, knowledge, and networks to lead the charge in sustainable business and governance. “Family business owners and leaders have a unique opportunity to drive impact beyond philanthropy by using their businesses as a vehicle to create a legacy of sustainability and impact”, said Michael Reed, Director of the ISFB and Senior Advisor. A new report highlights large family businesses' sustainability preparedness The institute's launch is accompanied by a new report, "Sustainability Board Preparedness in Large Family Businesses", which reveals: The world's largest public family businesses have made significant strides in aligning their boards for sustainability oversight While directors were engaged early in sustainability efforts, their engagement levels have plateaued, suggesting a need for renewed focus and innovation. Notably, individual board leadership in sustainability is significantly more gender-equal in family businesses compared to non-family businesses. Complementary micro-credential course To further support leaders working with family businesses, the ISFB is offering a complementary micro-credential course: "Introduction to Sustainable Family Business." Successful completion of the course earns participants a certified online badge. Interested leaders are encouraged to download the full report and learn more about the micro-credential course here.