Brunswick’s Maria Figueroa Küpçü talks to Professor Tensie Whelan, Director of the Center for Sustainable Business at NYU’s Stern School of Business, about the need to reshape corporate leadership for the future.
Many corporations have been vocal in recent years about their commitment to environment, social and governance concerns, taking them as seriously as they do financial returns. But attempts to measure and account for that commitment have been scattershot. The boardroom in particular has remained something of a black box on these issues. Even there, however, growing pressure on ESG has spilled into headlines, notably with recent actions against oil and gas companies.
Research by NYU’s Stern School of Business in January 2021 attempted to shine a light into that boardroom black box. It found that expertise on ESG matters critical to businesses remains sorely lacking among their board directors. Looking at the résumés of over 1,100 board members of Fortune 100 companies, it found less than a third had any relevant experience in ESG. When isolating aspects of ESG most impactful for particular companies, the percentage of board members with relevant experience dwindled to single digits.
Tensie Whelan was the author of that report. She is the Director of the Center for Sustainable Business at New York University’s Stern School of Business and the author of a steady drumbeat of research and professional insights into ESG concerns, particularly climate change. Whelan is the former President of the Rainforest Alliance and has served on numerous advisory boards both for nonprofits and corporations. She previously served on advisory boards with Unilever and Nespresso and currently serves on the advisory boards of ALO Advisors, Buzz on Earth, Giant Ventures, Arabesque and Inherent Group.
Tensie recently spoke about her view of the current ESG landscape with Brunswick Partner Maria Figueroa Küpçü, who leads the firm’s US Business and Society practice and is Head of its New York office. While the discussion focused on the critical role of boards, it included insights into corporate leadership on ESG in general and how ongoing pressure from investors to meet short-term financial predictions continues to weigh on the progress toward more sustainable business practices.
What’s different about this moment and ESG?
One of the things about transformational change is that when you’re in it, you can’t really tell that it’s happening. That’s true throughout history. So we see these different drivers, but we don’t know if this moment is different or not. This time, it feels different.
While many have been talking for many years about climate change and diversity and racism issues and the need for companies to work with their stakeholders in a value creation way, it hasn’t been seen as existential or mandatory. Today, it’s becoming very hard to say this is a nice-to-have, not a must-have, when climate change is very clearly affecting business and people in all different ways, when governments are saying they’re going to go net zero by 2050 and that’s going to mean massive regulatory changes. It’s very difficult to do that when, in this country at least, the kind of preponderance of evidence around racism and unconscious or implicit bias in business is becoming clearer and clearer.
I would say another major driver is the lack of government leadership. In the past, business could say, “Well, that’s government’s responsibility to tackle some of these issues.” But today many big businesses have more money than small countries and more influence than medium-sized countries in certain ways. Increasingly too, the transparency of what businesses are doing is something that customers can see very easily and hold them account to.
These different trends are coming together to create not a moment but actually a massive shift, a paradigm shift.