Greenwashers are on notice. At COP27, the UN High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities published its report on non-state actors, piling further pressure on corporate leaders to ensure that their action matches their commitments.
The group’s chair, Catherine McKenna, a former Canadian minister of environment and climate change, urged businesses and investors to “walk the talk on their net zero promises”.
What are the questions that a board should be asking itself and the executive of the company if it is to provide the leadership needed? “Why?” “Why now?” “Why not?” Sometimes the simplest questions are the most penetrating.
An effective governance system depends on effective information flows and robust discussion of key decisions. Executives tend to be keen to communicate that they have things in hand and only engage boards on things for which they already have the answers.
What is the simplest, but most effective thing that a board director can do? Ask the right question, on the right subject, at the right time, to the right person.
As a barrister, I learnt to try to keep my questioning as simple and direct as possible. Good cross examination of a witness in court requires careful preparation. The perfect question, I learnt, is sometimes intuition, but often born of solid work in advance.
Clearly, you can only know what the right question to pose is if you are sufficiently well-informed. In addition, you may need to have the individual independence of mind, and even the courage, to challenge a holy cow and to go against the grain of the culture and current thinking of the rest of the board.
Hence, board directors need to consider two things. First, what are the sorts of questions that I need to be prepared to ask? Second, how can I put myself in the best possible position to spot the right moment to pose the particular question?
Here are five sets of questions to help a non-executive director ensure that their company is not greenwashing and is walking the talk:
1. Context: To be able to pose the right questions to the executive of the organisation, a board director will need to have a sufficiently rounded, 360-degree view of the world, to be able to recognise the interdependent social, economic and environment trends.
So, have you fully understood the world in which you are doing business? One of the over-riding leadership tasks—and opportunities—for directors is to keep their heads above the fray and use their collective capabilities to look at the big picture, to help the executive to do the same and to relish the challenge.
2. Impact and risk: The board has a crucial responsibility to ask the right questions of the executive in relation to how it measures, records, and learns from its impact on the world, and then acts remedially to eliminate the negative and enhance the positive. Have you comprehensively measured the company’s impact on the world? Are your metrics robust? Are they subject to independent assessment? Are you transparent about the results?
3. Purpose: Has the organisation defined and articulated a clear social purpose? What positive benefit would society lose if the organisation ceased to exist? Are the social purpose and sustainability objectives fully integrated into the core business strategy? Are the opportunities that will come from such integration fully understood and articulated in the business ambition of the company?
The leadership responsibility of the board director is to persistently question anything that is being done that is not in service of the defined purpose of the organisation. This requires stepping in and stepping up, as part of its responsibility to direct and oversee the organisation.
4. Stakeholder engagement: Is the company bringing the right stakeholders into its decision-making? Has it conducted a rigorous stakeholder mapping? Boards will need to be assertive in asking the right questions about who is being engaged and on what basis. They need to ensure that it is not a ‘stakeholder-washing’ tactic, designed to present the image of a listening organisation without taking the consultation process with the external stakeholders seriously.
The McKenna report on net zero commitments recommends that corporates align their external policy and engagement efforts, including membership in trade associations, to the goal of reducing global emissions by at least 50% by 2030 and reaching net zero by 2050. It says: “This means lobbying for positive climate action and not lobbying against it.”
The buck will stop with the board, so it must be accountable for what happens. A failure to engage a full range of relevant stakeholders will expose the organisation to potentially serious legal or reputational risk.
5. Organisational culture: Are the internal incentives fully aligned with the strategic objectives? Is there a below-the-radar adverse political economy that protects vested interests within the company, surreptitiously defending “business as usual” and preventing transformational thinking? This is where the role of the penetrative question can serve to pierce the surface and reveal the true underlying organisational culture.
Awkward, but essential, questions will need to be placed on the agenda, such as: whose voice is taken seriously? Who are sustainability-related issues left to? Are the most respected voices ones that are delivering short term commercial returns? If their children could see what they speak up for and fight for in board discussions, would they be proud?
Board leadership requires the individual director to look in the mirror and check that they up to the job. Challenging a negative, unsustainable organisational culture will require courage, yes, but often just putting the right question to the right person at the right time can have game-changing impact.