Collaboration and co-leadership required to drive climate action
A lack of collaboration within and across industry, organisations, and between the board and management, can seriously hamper progress towards achieving climate goals and the transformation to a low-emissions, climate-resilient economy. Especially with the scope and scale of change required.
Embracing the need for change, CEOs are increasingly taking on the role of ‘chief climate officer’, understanding the impacts for their business and operations, working with their supply chain, driving change within their organisations, and leading up to the board. Ongoing change, uncertainty and disruption is the norm, so organisations and their stakeholders look to strong, stable leadership with a clear vision and strategy for the future.
While addressing the physical risks such as heavier rainfall, drier summers, floods and storms is becoming more frequent, many directors and CEOs are finding themselves in unchartered territory for transition planning, and moreso for the transformation of their businesses. In the KPMG and Chapter Zero NZ publication What difference can directors make? four key areas of shared responsibility between the board and management were identified: horizon scanning, prioritisation, demonstrating bold leadership and engaging with key stakeholders.
At the launch of the publication in March, director Laurissa Cooney CMInstD said demonstrating bold leadership and engaging with key stakeholders were going to become increasingly important.
“Governance is governance and management is management and you need to respect those lines, but for this journey it is important that governance . . . step in a bit further and support management,” she says.
In particular, boards need to upskill so that they can support their management teams, be across their obligations, and set the culture from the top. Being engaged and involved early on in the organisation’s scenario analysis, transition planning and developing your strategic response are key elements of this.
Because much of the climate journey is new for many organisations, there is also an opportunity for the board and management to learn together and use each other as a sounding board. One example is board and senior management workshops to learn from experts how climate change could impact their business.
Boards need to work with management to envision and help execute what’s needed. They need to contribute their knowledge, skills and experience at critical junctures and ensure management is sufficiently resourced to implement the board’s strategy and ensure management understands why your organisation needs to evolve and adapt, then support them to make the organisational changes required.
Pressure on management to address short-term issues and meet short-term targets needs to have a longer-term strategic lens applied. CEOs can also be the “meat in the sandwich” where there are pressures and expectations from staff for action on climate change and other aspects of organisational purpose, while boards may counsel their CEO to take a more balanced approach managing short and long-term objectives, including financial objectives. Balancing the tension between short-term wins and long-term viability can be a difficult path, so it’s important for the board to support the long-term drivers of success so that a less reactive and more strategic and intentional approach can be taken.
Increasingly people are looking to business to lead the change, so collectively boards and CEOs need to respond to stakeholder demands and drive meaningful change within their organisations. The role of the CEO in leading systemic change within their organisations and across industries cannot be overstated, but the CEO doesn’t and can’t act alone. Together, boards and management need to plan for the organisation’s future in a low-emissions, climate-resilient economy. Delivering this core responsibility makes collaboration essential.
Insights for directors:
- The relationship between the chair and CEO is critical. The chair needs to support the CEO to influence and collaborate with the board to take action
- Set the tone from the top and support, enable and resource the CEO to execute the right leadership decisions
- Partner with the CEO on their climate journey and provide opportunities to learn together and lever off each other’s strengths
- Ensure alignment on vision, strategy and goals
- Set and incentivise long-term objectives alongside short-term goals
- Encourage innovation, forward-thinking and an opportunities mindset
- Engage with the CEO to understand any organisational and/or stakeholder dissonance
