It’s a different world

Attitudes to ESG have shifted dramatically in the past five years. Directors now face more frequent climate disruption, resource security challenges, volatile regulatory support, geopolitical risk and investor pressure pulling in multiple directions. Boards are being asked to do more — with less certainty. And while risk awareness is improving, many boards still struggle to turn it into meaningful strategic action.

This article shares insights from a workshop discussion between non-executive directors (NEDs) attempting to cut through the complexity and co-create potential solutions for themselves and peers.  

Read on for discussion takeaways and suggested actions to help your board navigate today’s unique challenges with clarity.

1. Climate Risk is Financial Risk — and it’s Part of Your Legal Duty

As we covered in Part I, directors have a legal obligation to consider financially material risks, including those related to climate and nature. This is increasingly recognised across jurisdictions.

What this means for NEDs:

• Climate and nature risks must be identified, assessed, mitigated, and disclosed like any other business risk.
• The business judgment rule protects directors who act with diligence — not those who ignore foreseeable risks.
• ESG belongs in strategy, finance, audit, and risk committees.

Suggested actions:

• Ensure climate and nature risks are on the board agenda regularly.
• Appoint at least one or two climate and nature literate champions to lead discussion and follow-through.
• Refer to tools like the Directors’ Duties Navigator to understand legal obligations in your jurisdiction. 

2. Quantify the Business Case  

Directors are more likely to consider sustainability issues when it’s tied to bottom-line metrics — not just values.

Key takeaway: 
“Doing nothing” has costs — inaction can lead to rising insurance premiums, reputational damage, and legal exposure. Meanwhile, action can unlock investment, innovation, and efficiency gains.

Make it tangible by assessing:

• Impact on EBITDA (earnings before interest, taxes, depreciation, and amortization) or ROI (returns on investment).
• Cost of capital, insurance, or supply chain volatility
• Opportunities from blended finance or low-carbon tech adoption

Suggested actions:

• Ask management to model the cost of inaction alongside transition scenarios.
• Use external guidance like the Science Based Targets initiative (SBTi) to anchor your company’s strategy in robust, independent intelligence.
• Explore new accounting frameworks (e.g. by Alexandre Rambaud) that better reflect environmental value.

3. Governance Gaps Undermine Progress  

Many boards still lack clear climate governance — and without ownership, no one is truly accountable.

What boards are missing:

• Defined roles or committees with climate and nature oversight
• Climate KPIs linked to executive performance
• Integration of ESG into audit and risk reviews

Suggested actions:

• Set up or reinforce a sustainability or climate risk committee.
• Ensure board packs and dashboards quantify climate exposure and performance.
• Include ESG training as part of board onboarding and annual reviews.

4. Culture and Communication Are Often the Biggest Barriers

Participants noted that even with data, change can be slow due to cultural resistance and confusion.

Common challenges:

• Short-termism: Pressure for quarterly results crowds out long-term risk planning.
• “Everyone is involved, no one is accountable”: ESG touches all areas but has no clear owner.
• Climate fatigue: Competing board topics like AI or cybersecurity often push ESG to the side-lines.

Suggested actions:

• Use education tools like our Climate & Nature in the Boardroom Course, Climate Fresk or structured workshops to align understanding.
• Make climate literacy part of the whole board’s development — not just sustainability leads.
• Reinforce messaging through climate-aware directors and visible executive support.

5. Regulatory Complexity Is Rising, But It’s Not an Excuse for Delay

Boards must prepare for regulatory divergence, such as reduced projected ESG data under the EU Omnibus Directive or anti-ESG backlash in the US.

This creates risks like:

• Loss of comparable ESG data (especially from SMEs)
• Dependence on expensive private data providers
• Misalignment with investor expectations across jurisdictions

Suggested actions:

• Stay informed about upcoming EU and global regulation (e.g. CSRD, SFDR, SEC rules).
• Encourage management to build flexible reporting systems that can adapt to evolving rules.
• Engage with insurers, ratings agencies, and credit providers — they often lead the shift toward ESG integration.

6. Transition Plans Must Be Realistic  

A credible transition plan is a must-have. It signals that your company is thoughtfully preparing for high-potential risks and capturing opportunities.

Strong plans should:

• Be anchored in science and data (e.g. internal ops data, third party platforms, academia, supply chain mapping, insurers, etc)
• Include measurable milestones and timelines
• Be tied to core business strategy, not just public targets

Suggested actions:

• Stress-test your company’s transition plan for achievability and credibility.
• Review alignment with investor and customer expectations.
• Link delivery to executive incentives and board oversight. 

Checklist of priority actions: 

• Put climate and nature risk on the board agenda regularly
• Demand quantified risk and opportunity modelling
• Establish clear governance structures with climate and nature accountability
• Invest in climate literacy at leadership level
• Push for credible, science-based transition plans
• Monitor regulatory changes and reporting readiness
• Encourage cultural change, not just compliance

Get in touch with your local Chapter if you require further support to influence and act from the boardroom.

Special thanks to the contributions of our workshop participants and discussion co-facilitators Oliver Dudok Van Heel (CISL fellow), Nathalie Dogniez (Eurosif) Sarah Hill-Smith and Klara Lochem (CCLI).