‘Corporate boards get to decide whether they want to go the route of the phoenix or the dodo,’ says Veena Ramani, research director at FCLTGlobal, paraphrasing BlackRock chair and CEO Larry Fink in the latest episode of the Governance Matters podcast.
A major barrier to combating climate change is the short-term views many companies – and investors – still take when it comes to meeting the market’s quarterly expectations of financial performance. This contributes to a focus on making changes and pursuing strategies that don’t fully take into account risks and opportunities beyond the immediate horizon.
One group seeking to change this is FCLTGlobal, a non-profit organization whose aim is to focus capital on the long term in support of a sustainable economy. Ramani is an expert in corporate governance, climate change and ESG matters. She joined the organization in 2021 after spending 15 years at Ceres, during which her work included launching a program on corporate governance and creating an online ESG training curriculum for directors.
Ramani, who was a judge for the recent inaugural ESG Integration Awards, tells podcast host Jeff Cossette she has seen an attitudinal shift among directors on climate change. ‘One major reason is that the impacts of climate change are clearly visible all around us,’ she says. ‘The transition consequences of climate change are all around us as well. [They and] the transition costs of climate change are the risks a company faces, given that the market context is changing.’
Ramani points to a combination of other factors such as capital flows, global policies and even litigation as factors causing boards to pay attention to climate-related risks and opportunities. She also notes that demonstrating expertise in the field makes directors attractive candidates to join other boards.
According to research by Corporate Secretary, 65 percent of governance respondents at mega-caps say investors have asked about their board’s skills in relation to ESG issues. (You can access the full research report by clicking here.)
Ramani says investors aren’t looking for directors with scientific expertise. Rather, she says, they are looking for directors who have knowledge and understanding of what climate change means and what it means in the specific context of the company they oversee. They also want to see individuals who can translate this knowledge into what it means to be a corporate director: the impact on strategy, capital allocation, risk and long-term value creation.
Find out more by downloading the latest Governance Matters podcast.
The Governance Matters podcast provides listeners with insight into cutting-edge issues of the day for corporate secretaries, general counsel and other governance professionals.
The series looks at how the role of the corporate secretary and the board has evolved over time, as well as how the governance landscape continues to change. From ESG to entity management, shareholder engagement to technology, hear from award-winning governance professionals and leading advisers about the latest public company governance matters.
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Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
