Getting your Board to Think Differently
“Stewards of the Future.”
That’s what Helle Bank Jorgensen – sustainability, climate change and ESG advisor, and author of the book of the same name – wants us to imagine when we consider a board.
Bank Jorgensen is the CEO and Founder of Competent Boards, an organisation that creates ESG and climate training programmes for board directors and senior business professionals. It seeks to “inform leaders on the mindset they need to be a leader of the future” – to make them aware of the crucial dilemmas facing society now and in the future, and to give them the toolset to tackle them effectively.
“How can they make informed decisions,” Bank Jorgensen asks, “if they’re not informed?”
With 30 years of experience in sustainable business practice, she has specialised in evaluating ESG risks and opportunities from small businesses to leading Fortune 500 companies. She is also a member of the Nasdaq Center for Board Excellence’s Sustainability & ESG Insights Council, and the World Economic Forum Expert Network for Corporate Governance, Leadership and Emerging Multinationals.
“They need to understand a whole new world, with all its societal shifts, in order to create meaningful change,” Bank Jorgensen tells us. “Boards are the essential group to drive that change.”
But boards, despite arguably being the most powerful players in the company, are heavily criticised for drawing on outdated perspectives – not to mention a stark lack of diversity. ‘Male, pale and stale’ is a term too commonly used to describe the typical board (and features in Bank Jorgensen’s book as a chapter title) with some dismissing boards as simply vehicles providing a revenue stream for retired CEOs.
“How can they make informed decisions if they’re not informed?”Helle Bank Jorgensen
According to research conducted by governance company Diligent Institute, the average age of board members is around 60 and rising. Boards are increasingly being held accountable for more than just quarterly financial performance, especially as purpose-led businesses are becoming more commonplace. Composed mainly of former C-suite figures, this raises concerns over boards being stuck in the past, or worse – in echo chambers.
In an insular environment where opposing views are scarce, it is far easier to continue making the same decisions guided by a shareholder philosophy. And when they hold equity in the company, those decisions have a significant impact.
“Are they just there to make some profit?” Bank Jorgensen questions.
However, there are glimmers of change, with more boards considering personal background alongside executive experience and knowledge. But it goes beyond hiring more equitably; what must boards do to spearhead the change that the world needs?
The future that we may hope for – sustainable communities, climate justice, equality – needs business on its side. Initiatives that favour sustainability, wellbeing and bettering the planet can no longer be thought of as a ‘nice-to-have’. Boards have a responsibility to champion them.
In order to ‘steward the future’, Bank Jorgensen argues that it comes down to some key competencies: she’s not only giving the ‘why’, but also the ‘how’.
Initiatives that favour sustainability, wellbeing and bettering the planet can no longer be thought of as ‘nice-to-have’.
Thinking more long term
For Bank Jorgensen, a long-term view is essential to the board’s motivation. “Why are we here?” she demands. “Are we here as stewards of the short term? Are we here as stewards of the long term financially? Are we also here as stewards of the employees, stewards of our customers, stewards of the natural resources we’re using?”
In her book, Bank Jorgensen elaborates on her philosophy: “When navigating sporadic upheavals, the board should not be tempted to lower its gaze from the distant horizon, and even beyond.”
She asks boards to think beyond quarterly evaluations: “Business does not create real value from one quarter to the next. Most companies take at least four or five years to build a solid and sustainable business. In the case of an energy or mining company, it could take even longer…so why are we so focused on quarterly numbers?”
Be emboldened by change
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“The bottom line is that competent boards will be those emboldened by change, not intimidated by it,” Bank Jorgensen writes. Boards must work in tandem with changes to customers’ – and the world’s – needs.
Boards can often fall into the trap of looking inward rather than outward, and with insular decision making, they’re unable to react to the world as it changes around them. Having a board that mirrors its customers and clients – by empowering gender and ethnic diversity within the board and elevating their voices – will help to enact meaningful and inclusive change in our ever-evolving world.
Finding a purpose
Bank Jorgensen offers a simplified definition to a ‘competent board’: “One that has defined not only the purpose of the company, but frankly, also the purpose of the board.” Despite abstract terminology rife in business jargon, Bank Jorgensen manages to break purpose down into a rubric. She asks board members to “pick a few of the 17 [SDG] goals where the business can make the biggest impact” – refreshingly pragmatic advice for something as nebulous as ‘purpose’.
“Who are the current business leaders that care about their different stakeholder groups?” Bank Jorgensen questions. “We’re training business leaders too, as that’s the future board of directors.” Putting in the work must start early – only then can boards steward the future.