Webinar: Sustainability Expert Panel Agrees: The Time for Board ESG Education Is Now

With this era of new environmental, social, and governance (ESG) challenges and responsibilities bringing more blindspots in board oversight than ever before, the need to address sustainability knowledge gaps on today’s corporate boards has reached unprecedented importance, a panel of sustainability experts from Michigan Ross and Ceres, Inc. agreed during a live discussion on June 27, 2023. The webinar was a preview of the new online program from Michigan Ross and Ceres, “Building Board Expertise on Sustainability”.

Steven M. Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets at Ceres, Inc., highlighted the rapidly evolving landscape of climate and sustainability disclosures, stressing that climate risk is a financial risk but also an enormous opportunity and that investors need transparent and consistent data from U.S. companies to understand what those risks and opportunities are. “If you’re a company, if you’re a director, or if you’re advising directors, and you don’t have a disclosure framework in place, we encourage you to start as soon as you can,” said Rothstein. “Because there will be these requirements both internationally and domestically,” he added in reference to the SEC’s proposed climate disclosure rules expected to be finalized later in 2023 and the European Union’s Corporate Sustainability Reporting Directive (CSRD), among other regulations. 

Following up on Rothstein’s discussion on disclosures, Elizabeth Doty, Director of the Corporate Political Responsibility Taskforce at University of Michigan - Erb Institute, the University of Michigan's business-sustainability partnership between the Ross School of Business and the School for Environment and Sustainability, provided perspective on the board’s complex role in policy engagement. “There’s increasing interest from investors to understand companies’ influence on policy, politics, and civic discourse,” Doty commented, providing the example of political influence and lobbying activities being a disclosure requirement in the draft European Sustainability Reporting Standards (ESRS G1). “This is one indicator of a larger trend towards more disclosure not only of what companies are spending on politics but what they are advocating for,” she added. Doty explained that this is due to the growing realization that unlocking sustainability as a business opportunity depends on aligned and stable public policy. 

On top of the challenges brought about by corporate political responsibility, board members also face a slew of broader climate risks, as expanded upon by Tom Lyon, Dow Professor of Sustainable Science, Technology and Commerce at Michigan Ross. “Challenges and potentially large costs are coming, and boards need to understand climate risk,” emphasized Lyon, providing harrowing figures on current and future costs of climate change that have grown exponentially in the last decade, as well as surveys reporting a growing concern among CEOs regarding boards’ ESG oversight and expertise. “You should be anticipating a wave of turnover on boards as executives and investors look for board members that know something about these areas,” he added.

Together, the panel stressed the urgency to educate boards on understanding and managing ESG-related risks and opportunities effectively, also emphasizing the various risks board members face if they fail to dedicate time in this space. The three panelists along with the panel host, Mike Barger, Clinical Assistant Professor of Business Administration at Michigan Ross, will be sharing their expertise further in the new online program from Michigan Ross and Ceres, “Building Board Expertise on Sustainability” alongside other sustainability thought leaders in Fall 2023.