Boards Put Climate Change on Backburner as Business Threat

Critical business threats such as climate change, AI and cybersecurity are being pushed to the backburner as British boardrooms focus on immediate business risks.

Amid continued economic volatility and challenging trading conditions, research among 200 UK board directors reveals a surprising lack of focus on future-proofing risks., according to a new report by executive search firm Norman Broadbent in partnership with BDO. 

Only 8% consider cybersecurity one of the top three risks facing their organisations, while other critical issues such as AI (4%) and the environment (2%) lag further even behind in board risk and opportunity assessments.

In contrast, boards view the economic environment as the biggest risk facing their organisations (19%), followed by workforce talent (16%), access to finance (12%), regulatory change and compliance (12%), and geopolitical factors and UK government policy (10%).

Tanya Gass, a partner in Norman Broadbent’s board practice said: “Perhaps it’s not surprising that many business risks, such as cyber, AI, and climate change, are not being prioritised by boardrooms in the near term as they continue to grapple with a volatile global economic environment.”

Two hundred board members responded to the Norman Broadbent/BDO survey, 87% of whom were non-executive directors (NEDs). Around one third of respondents were from listed companies, including the FTSE 350.

Optimism about UK economy

Meanwhile, a separate survey of just FTSE 350 companies found that British boards are optimistic about the UK economy, less so about the world economy. 

Over half of UK board members (53%) expect UK economic conditions to improve compared to 44% when it comes to the wider global economy. 

And nearly half of board members (47%) expect the UK economy to become more competitive over the next five years. 

Trouble ahead for Stock Exchange

However, more than half of board members (53%) expect more companies to be delisted from the Stock Exchange over the same time period. 

The annual boardroom survey by The Chartered Governance Institute UK & Ireland makes the point that, “the new Government needs to prioritise making UK-listed companies attractive to investors in comparison to overseas listings”. 

And, like the Norman Broadbent/BDO report, respondents were unconcerned about global warming, with a quarter of board members not seeing climate change as a risk at all. 

Commenting on the Chartered Governance Institute boardroom survey, LawDeb director of corporate secretarial services Patrick Davis said: “It is concerning to see climate change slipping down the risk register. It is remarkable that a quarter of board members don't see climate change as a risk at all - this betrays a perceived disconnect between the realities of climate impact and the day-to-day of business operations. 

“An education piece is sorely needed, to ensure boards understand how non-tangible or future risks can have very real consequences for today’s financial and governance decision making. ESG cannot be outsourced to a committee - it must be inherent to every conversation happening at the highest tier of business.”

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