Close
Learning Methods
Classroom
A traditional classroom couples on-site learning with the added value of face-to-face interaction with instructors and peers. With courses and exams scheduled worldwide, you will be sure to find a class near you.
Interaction
Highly Interactive
On-going interaction with instructor throughout the entire classroom event
Interaction with peers/professionals via face-to-face
Components (May Include)
Onsite
On-site instructor-led delivery of course modules, discussions, exercises, case studies, and application opportunities
Supplemental learning elements such as: audio/video files, tools and templates, articles and/or white papers
E-course materials available two weeks prior to the course start date; printed course materials ship directly to the event location
Duration
One + Days
Varies by course ranging from one to multiple days
Technical Needs
Specific requirements are clearly noted on the course page
Virtual Classroom
Ideal for those who appreciate live education instruction, but looking to save on travel. A virtual classroom affords you many of the same learning benefits as traditional–all from the convenience of your office.
Interaction
Highly Interactive
On-going interaction with instructor throughout the entire virtual classroom event
Interaction with peers/professionals via online environment
Components (May Include)
Live online instructor-led delivery of course modules, discussions, exercises, case studies, and application opportunities
Supplemental learning elements such as: audio/video files, tools and templates, articles and/or white papers
E-course materials available up to one week prior to the course start date. Recorded playback and supplemental materials available up to seven days after the live event.
Duration
Varies by course ranging from one to multiple sessions
Technical Needs
Adobe Flash Player
Acrobat Reader
Computer with sound capability and high-speed internet access
Phone line access
E-Learning
A self-paced, online learning experience that allows you to study any time of day. Course material is pre-recorded by an instructor and you have the flexibility to view content modules as desired.
Interaction
Independent Learning
Components (May Include)
Pre-Recorded
Pre-recorded course modules
Supplemental learning elements such as: audio/video files, online quizzes
E-course materials start on the day of purchase
Optional purchased print material ships within 7 business days
Duration
120 Days - Anytime
120-day access starts on the day of purchase
Direct access to all components
Technical Needs
Adobe Flash Player
Acrobat Reader
Computer with sound capability and high-speed internet access
Close
Contact Sponsor
E-Reward
Online
Paul Thompson
Phone: 1 44 01614322584
Contact by Email | Website
Close
Sorry, you can't add this item to the cart.
You have reached the maximum allowed quantity for purchase in your cart or the item isn't available anymore.
Product successfully added to your cart!
Price
View your cart
Continue shopping
Please note our website will be down this Friday, November 5 from 9pm ET – 11pm ET for routine maintenance. We apologize for any inconvenience.
WORKSPAN
WORKSPAN DAILY |

Board Members Across U.S. Discuss ESG Risk and Return

Figure

                                                                                                                                                                          oonal / iStock

Editor’s Note: Workspan Daily will be publishing a monthly executive compensation column from Willis Towers Watson for the benefit of our readers and to encourage further discourse on topics vital to compensation professionals. New to WorldatWork? Please feel free to join the discussion in our Online Community or send your thoughts to workspan@worldatwork.org.

In the past year, the world has faced a global pandemic, significant natural disasters, intense social and racial issues, and economic plunges that have highlighted the need for organizations to become better at managing major shocks.

Recently, based on broad research, we’ve addressed the role of organizations in managing environmental issues that are deeply affecting both business and communities. But how are boards and management teams actually approaching these issues? What actions are they taking and what factors are at play as decisions are made? And how are these issues affecting other parts of the business, particularly human capital?

Board Member Roundtable Discussion

Willis Towers Watson recently convened the first of several planned roundtable discussions, with nine United States-based board members spanning 50 companies in 31 industries to ask them how they and their management teams are addressing climate hurdles within ESG and any resulting implications across the business.

Not surprisingly, the answers were complex and more sophisticated than a simple sound-bite pledge to “go green” or “achieve net-zero emissions.” Organizations, their boards and management teams are being pressured on all sides to address environmental issues. Regulatory requirements to reduce carbon emissions and overall waste are likely to increase in the U.S. Companies in the United Kingdom, Western Europe, Canada and elsewhere are setting ambitious climate goals and reorganizing their operations to achieve those goals. U.S. companies and boards are aware of these moves and are sorting through which risks and issues are most appropriate for their companies to address.

We asked participating board members to discuss three questions:

  1. How concerned are the boards of U.S. companies about climate issues and which climate issues are topping the list?
  2. Are climate issues seen primarily as risk-related or are there other drivers?
  3. How and where is climate risk addressed by the board?

The conversation was robust, nuanced and, at times, argumentative, resulting in several key points:

  • Board members of U.S. companies are authentically concerned about climate issues and risk. However, the specific risks and their relative importance varies considerably by company and industry. Climate risk is viewed in the context of the many other risks that boards consider and address on a regular basis. Cyber risk, for example, has become a serious topic for virtually every board and has increased in importance as well as the amount of time and attention spent addressing it. Yet, climate risk is a newer topic for many boards.
  • Boards clearly see risk as part of the overall value equation for their organizations. They see both monitoring risk and driving performance as key to creating value for all stakeholders, including regulators, shareholders, employees and consumers.
  • However, climate issues are not just seen as a risk. Addressing these issues is also seen as a potential benefit in terms of attracting and retaining employees, customers and investors (and, therefore, capital).

To the extent that climate issues are seen as risks, there are two broad, and often intertwined categories to consider.

Category 1: What the Climate and Environment Do to Our Company
This includes risks associated with issues such as rising sea levels and intense weather events. While there was disagreement among board members regarding the increased frequency and severity of these events, there was agreement that businesses today have more assets that are exposed to climate events, and that global networks and supply chains also expose companies to greater climate risk. In summary, we heard about two sub-categories of risk from climate events:

  • Risk of more severe, sustained or frequent climate events.
  • Risk of more assets, people, infrastructure and supply chains exposed to those events.

Category 2: What Our Company Is Doing to the Environment
While corporations and investors are paying a great deal of attention to lowering greenhouse gas emissions and carbon footprints, roundtable board members were quick to point out that environmental impact comes in many forms.

One board member from a large electric power producer shared that her company was very concerned about COemissions, but was also concerned with releasing other pollutants into the air and water. Another board member from a plastics manufacturing company expressed concern about the volume of non-biodegradable plastic produced, how little is recycled, and how much plastic is in our oceans and landfills.

Other board members were concerned about the net environmental cost of making and shipping their products. The discussion made clear that the most important and most actionable environmental impacts vary a great deal by industry.

Board members also discussed the critical role of human capital in any climate or other ESG efforts. Driving meaningful climate initiatives will require companies to hire or develop people with different skill sets and capabilities; re-organize key functions and processes; build new metrics into incentive programs; and incorporate climate issues into corporate governance. Strong ESG performance also will be instrumental in attracting, motivating and retaining employees and customers.

Finding a Way Forward

Board members discussed the lack of simple solutions. Virtually everything a company does to reduce its emissions or footprint has costs and consequences. Every solution involves trade-offs that must be considered, quantified and compared to other possible solutions.

At the same time, waiting for perfect solutions is not an option in a rapidly changing world. For example, wind turbines can be great sources of carbon-free electricity, but also require significant amounts of steel and cement, as well as transportation, to build and install. Some consider them beautiful, others consider them an eyesore. But just because there are trade-offs, board members believe that should not preclude the search for solutions.

It was also acknowledged that, while finding true end-to-end solutions and taking all trade-offs into account is ideal, few companies really do so — nor can they afford to.

During the discussion, some board members placed climate and other ESG initiatives into three categories:

  • Value additive: Initiatives that add value by helping reduce company-specific risk, lower the cost of capital, help attract and retain employees and customers, and enhance the brand
  • Value decreasing: Initiatives that are expensive, with little perceivable payoff, where the company meets the expectations of regulations, investors, customers and employees, but not much more.
  • Trade-offs: Initiatives that require significant displacement of products, production facilities, and other assets, but will generate significant revenue and profit over time, in a way that has more positive environmental (and/or other ESG) impact. Auto companies that switch from manufacturing internal combustion engine cars to electric vehicles or hybrids is one example.

The group also discussed the importance of not making public promises that the company cannot keep. Bold goals are inspiring and work well in certain circumstances, but board members warned against pleasant-sounding commitments and platitudes that have not been adequately planned and thought through. Climate and other ESG statements and commitments are being taken seriously by investors, employees and customers.

In terms of how and where boards are addressing climate risk, and risk in general, we found that there tends not to be a centralized risk committee in most organizations (except in financial services companies). Different risk categories are handled by different committees, with major risks (e.g., cyber) most often addressed at the board level. Climate risk is a newer or less developed topic for many U.S. boards and does not have a common home. However, compensation committees are increasingly addressing climate and other ESG issues as they consider including them in executive incentive plans.

Lastly, roundtable participants voiced a need for more high-quality education for board members on climate issues and climate risk. Boards could use some hard core, fact- and science-based, no-nonsense education and unbiased information on environmental and climate facts and risks. This, then, will allow them to make intelligent, informed decisions and trade-offs for their organizations.

About the Authors

Don Delves Bio Image

Don Delves is a managing director and North America practice leader, executive compensation, at Willis Towers Watson.




John Bremen Bio Image

John M. Bremen is a managing director, human capital and benefits, at Willis Towers Watson.




Rowan Douglas Bio Image

Rowan Douglas is the head of the Climate and Resilience Hub at Willis Towers Watson   




Adrienne Altman Bio Image

Adrienne Altman is a managing director and head of the North America Rewards Line of Business at Willis Towers Watson 


About WorldatWork

WorldatWork is a professional nonprofit association that sets the agenda and standard of excellence in the field of Total Rewards. Our membership, signature certifications, data, content, and conferences are designed to advance our members’ leadership, and to help them influence great outcomes for their own organizations.

About Membership

Membership provides access to practical resources, research, emerging trends, a professional network, and career-building education and certification. Learn more and join today.