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NextGen Magazine

 
 

Study: Many Corporate Board Members Don't Fully Understand Climate Change

By:
Chris Gaetano
Published Date:
Jan 13, 2021
A recent study has found that, within corporate boards, those with environmental protection expertise are a small minority and those specifically with climate change expertise are an even smaller one, Bloomberg reported.

The study found that, of 1,188 directors at the 100 largest companies, only 6 percent had relevant credentials in environmental protection, and just 0.3 percent has credentials in climate- or water-related issues.

The study expressed concerns that this means that many companies do not fully understand the climate crisis, and therefore do not understand the material and financial risks it presents to their firms, despite programs and initiatives launched at many of them. While environmental, social and governance (ESG)-related issues can affect a company's fortunes to a large degree, the paper was unsure whether today's boards were up to the task of addressing them.

"For example, one property and casualty insurance company has no environmental expertise on the board in a year experiencing $100 billion in damage caused by climate change--heightened extreme weather events," said the study abstract.

Not every board is like this, though; the report pointed to Dow Chemicals as a positive example that other companies could follow. On its board is a member of the U.S. Climate Action partnership, a former Environmental Protection Agency administrator and the chair of the World Business Council for Sustainable Development. In contrast, it said that Amazon lacks board members with expertise in cybersecurity and customer privacy issues, employee issues and broader environmental issues, despite the fact that these issues all weigh materially on the company's finances.