29 Jul 2021
ESG issues and digital transformation top the post-COVID corporate agenda
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A significant number of senior chairpersons and directors serving on the boards of global companies shared their views on a number of pressing issues prior to attending a webinar with Dominic Barton, Canada’s Ambassador to China.
Susanne Thorning-Lund, Partner in the Board Practice at Odgers Berndtson, considers the responses and what they say about the biggest corporate priorities in the short and long term.
Climate change, and environmental, social, and corporate governance considerations generally, are top of mind. Three-quarters of the executives who responded to the survey said that ESG is an immediate priority and tackling these issues is essential to ensuring the survival and success of their business in a post-COVID world.
ESG considerations present real challenges to companies in every sector, and, for some, those challenges are existential.
Over half of the respondents (52%) said climate change and resource scarcity are long term challenges for their company in terms of securing sustained future growth.
One aspect of this challenge is the ability to raise capital. Almost all respondents (99%) agreed that a company’s ESG rating has an effect on capital raising. Whilst 62% said it only affects the ability to raise capital slightly, close to 2 in 5 (37%) said it has a significant effect.
Similarly, 94% of the respondents reported a shift amongst investors, from a focus on revenue generation to ESG issues. Over half (58%) said that some investors are doing this whilst 43% say most investors are now doing so.
Once companies accept that ESG considerations must be addressed and woven into every aspect of corporate strategy, communications, and people development, it’s clear that executive teams and boards need to add ESG to their skillset. Over half of the respondents (56%) said that expertise in sustainability and climate change are already reflected in their board composition.
Executives are taking concerns about climate change and carbon emissions to heart in their own plans as well. When asked to what extent they anticipated resuming business travel in a post-COVID world, the vast majority of respondents (74%) said they anticipated travelling less, 26% said they expect to travel about the same amount, and only 6% said they expected to travel more.
Digital transformation and innovation
Two more issues on every large company’s radar screen are the pace and breadth of digital transformation and the drive to innovate.
The revolution in digital technology we are currently experiencing is creating uncertainty but also great opportunity.
78% of survey respondents said that technology, including AI and blockchain, is a key driver of global economic growth today.
While companies recognise how critical digital fluency is to their survival, this hasn’t always translated into ensuring that competency is present at board level. While over half of respondents (56%) said that expertise in technology and digital innovation are already reflected in their board composition, only 19% and 11%, respectively, said their boards were well-versed in cyber-security issues and understood the value and importance of social media.
Unsurprisingly, 62% of respondents said that innovation and research and development are immediate short-term priorities and that progress in these areas is essential to ensuring the survival and success of their business in a post-COVID world.
Two-thirds (65%) identified research and innovation as key drivers of global economic growth.
Focus on culture and people
Part of ensuring that an organisation is equipped to meet any challenges that arise, is to cultivate the right skills on the leadership team and in the boardroom as well as a cohesive and strong company culture.
Almost all respondents (94%) agreed that business success in a post-COVID world hinges on a company’s behaviour and culture.
The survey responses indicated directors are comfortable with the extent to which they and their company are already doing this. 78% of respondents said that their boards already contain a diversity of lived experiences and insights including diverse sector expertise and a variety of cultural and geographic backgrounds.
However, 36% also indicated that the alignment of purpose and values to corporate objectives presented a long-term challenge and risk to sustained future growth.
However, assessing and refreshing the competencies and skills at the top of an organisation and creating a sustainable talent pipeline is a never-ending task. In this respect, 78% of respondents said that access to talent remains a long-term challenge for their company and a challenge for securing sustained future growth.
The survey results are revealing about the challenges corporate executives and board members are most worried about—and the opportunities they are most excited about—in a post-COVID future.