Stakeholder leverage
2024 IOD LEADERSHIP CONFERENCE OUTTAKE
The 2024 Institute of Directors (IoD) Leadership Conference challenged us to think about the future we’re creating, alongside the importance of good governance. The decisions we make as directors literally write our future.
So, it was very apt that the opening keynote speaker was Dr Rod Carr, inaugural chair of He Pou a Rangi the Climate Change Commission. But in addressing arguably the most pressing issue of our time, he chose to remove his chairperson hat so he could speak somewhat more candidly, as a fellow director, New Zealander, parent, and grandparent – albeit with significant climate change knowledge and awareness.
And underscoring the future focus of the conference, one of his key takeaways was that in terms of climate change, the future is now. The decisions or indecision of directors today are writing our future.
By virtue of their leadership roles, he claims that directors don’t have the excuse of feeling unempowered or unable to make a difference. Directors have leverage around the boardroom tables they govern and over their entities’ internal processes and channels to market; and the entities they govern have leverage over their procurement and supply chains.
But our stakeholders also have leverage. Increasingly, younger people are understanding that who they choose to work for is one of their points of leverage. While they might not have big spending power, and they might not sit on boards, they can choose who they work for. They’re also increasingly aware that every dollar they spend is a vote for more of the things they bought, as the system is designed to put back on the shelf the thing they just bought. So, the power of our stakeholders should not be underestimated.
In Deloitte’s 2024 Gen Z and Millennial Survey, for the majority of Gen Zs (86%) and millennials (89%) having a sense of purpose and working for a company whose values align with their own was critical for their job selection and satisfaction. In particular, environmental sustainability was a key driver both of their career decisions and consumer behaviours, but they are concerned about the gaps between what is being said and what is being done by businesses.
Despite historic levels of inflation, an increasing number of Gen Zs and millennials are putting pressure on their employers to take action on climate change, provide more sustainable purchasing options for customers, review their supply chains, and support employees to be more sustainable/transition to a low-carbon economy.
Younger people aren’t the only demographic taking climate change seriously. While the buying power of younger generations may have been impacted by the cost-of-living crisis – with a short-term focus on value over values – the Kantar/SBC 2023 Better Futures Report found that the sustainability commitment of those aged 65 and over had increased. Consumer NZ’s 2023 Sentiment Tracker showed similar trends with a spike in concern about climate change by consumers aged 50 years and over. Despite cost-of-living being their number one concern, consumers were changing spending habits for sustainability and environmental reasons.
Research from the Financial Services Council highlighted that Gen Zs and millennials were the generations worst affected by the current cost-of-living crisis. Further, despite being less than 20% of New Zealand’s population, Boomers hold roughly 60% of the country’s total individual net wealth, however, the “great wealth transfer” has started.
While the cost-of-living crisis may have resulted in a short-term lessening of the focus on sustainability in some areas, the here and now thinking of the crisis does not represent the longer-term thinking or values of stakeholders. Being aware of the changing demands of employees, consumers, supply chain partners, investors, and more is critical for long-term financial sustainability, developing trusting relationships and maintaining social license.
Want to hear more and get insights like these? Registrations are now open for the IoD 2025 Annual Leadership Conference 11 – 12 September 2025: Register now!
