A study by shareholder activist Just Share has found that the boards of JSE-listed companies are severely lacking in sustainability skills.
Only 5% of directors who sit on the boards of the JSE’s top 40 listed group have sustainability-related qualifications, the study shows.
That translates to 25 of the 487 directors of companies in the JSE’s top 40 having a sustainability-related qualification. Of further concern, about half of top 40 companies do not have a single board member with the requisite sustainability qualifications.
“The lack of such expertise on top 40 company boards raises concerns about those companies’ ability to fully integrate crucial sustainability considerations into their strategies and decision-making,” Just Share said.
“In most corporate governance contexts, the knowledge associated with expertise is closely correlated with a suitable formal qualification. A business degree is generally regarded as necessary to having business expertise, financial expertise is associated with having a chartered accountancy or finance-related degree, and a law degree is associated with legal expertise,” it said.
“There is no reason sustainability expertise should be approached any differently. However, many companies claim that their boards contain sustainability expertise, without specifying what this expertise is or who holds it.”
Just Share urged companies to improve their disclosure of “claimed sustainability expertise for directors who lack a formal qualification in this area, so that stakeholders can form a better picture of overall board sustainability capacity”.
Corporate sustainability is a growing concern among investors who are demanding not only profitable returns but are also focused on social good and companies commitment to combat climate change. Pillars of sustainability include environmental awareness and targets, and corporate social responsibility.
In its 2023 annual report Standard Bank said it was looking for a nonexecutive director with skills on climate issues and finance, as Africa’s biggest lender by assets cements its position as one of the biggest investors in green energy in SA.
Chair Nonkululeko Nyembezi said in the report that the search for a director with expertise on environmental, social and governance (ESG) issues had proven to be a challenge.
“We continue to search systematically for a potential director with deep expertise at the intersection of financial services and ESG (particularly climate issues and finance), but the talent pool is not large and demand is very high. For the time being, we obtain expert advice as required,” Nyembezi said.
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