Are corporate boardrooms suitably equipped to guide businesses into an increasingly uncertain future? Despite the political backlash against environmental, social & governance (ESG) standards as sustainability was marketed by investment funds and other profiteers, the question remains. Strip away the noise about these trigger words and the risks and opportunities surrounding environmental constraints, social licence to operate and sound corporate governance are still real.
At a recent impact investment conference in Paris the Potsdam Institute for Climate Research presented a compelling and scientifically supported message that seven of the nine biophysical boundaries essential for life on earth have already been breached. These include overreach in climate change, change in biosphere integrity, land system change, fresh water change, modification of biogeochemical flows, the introduction of novel entities into the environment and ocean acidification.
Central to that scientific picture are “tipping points” ― threshold events that, once crossed, fundamentally and irreversibly alter global systems from their earlier states. The most widely discussed tipping point in Europe is the possible collapse of the Atlantic Meridional Overturning Circulation (AMOC) current system because of excessive fresh water from the Greenland ice sheet. It is the AMOC system that sends warm water northwards from the Caribbean and is responsible for Europe’s largely habitable climate. If it shuts down European winters will be dramatically colder.
These planetary transgressions, with social disparities such as increased wealth inequality, corruption and tax evasion by companies raise the question: do board directors have the required representative diversity and skill sets to navigate increasing turbulence? Our experience is that boards are still struggling to tackle many of these nonfinancial realities, especially in the value chain.
At the same Paris event former Unilever CEO Paul Polman (someone who should know a thing or two about supply chain risk) noted that the average age of independent board members of companies on the S&P 500 index is 63. The index comprises 500 of the largest publicly listed companies in the US, most of which have some form of multinational presence or supply chain. A recent sustainability conference in Johannesburg highlighted a similar trend in South Africa, where the average age is 60.
While experience gained through time in the corporate trenches is essential, one must view this age cohort against the fact that nearly half the world’s population is aged under 30 (in South Africa it is 28). The age discrepancy between companies and customers is one thing; another is the time horizons board members might be governing for.
On the panel in Paris, Hikaru Hayakawa from Climate Cardinals, a climate education facilitator, asked, in 20 years will the legacies of the current business leader be financial results or the state of the planet they left behind for future generations?
Ironically, the ESG pushback is not reversing us to an age of Friedmanesque innocence in which the only responsibility of business is shareholder profit. In the modern, globalised world there is no room for such naivety. The Covid-19 pandemic and, more recently, the Israeli-US war with Iran have glaringly highlighted the vulnerabilities of global value chains that most companies are hooked into.
Hikaru Hayakawa from Climate Cardinals, a climate education facilitator, asked, in 20 years will the legacies of the current business leader be financial results or the state of the planet they left behind for future generations?
A prolonged drought in 2023-24 reduced the Panama Canal’s capacity by 40% as water levels in the artificial Gatun Lake dropped to their lowest since 1995. The Valencia floods of 2024 closed vehicle companies and kept the port, one of the busiest in the Mediterranean, off-limits for 48 hours. Closer to home, persistent extreme winds reduced Cape Town harbour’s capacity from December 2025 into the new year ― hitting fresh fruit exports at their most critical season.
In Bangladesh and Nepal civil unrest against old, corrupt governments led to regime change in both countries, but only after weeks of public protest and economic damage. According to data from the World Trade Organisation, Bangladesh is the world’s second-largest garment exporter, with retailers such as H&M, Uniqlo and Zara all reporting disruptions and container ships stranded in the Bay of Bengal due to the closure of Chittagong port, through which 90% of Bangladesh’s international trade passes.
Returning to the boardroom, experience will need to be complemented with a balanced mix of viewpoints, including younger generations and multidisciplinary skillsets. Without these they will be limited in their ability to navigate arguably the most systemically exposed period business has faced yet.
Such uncertainty will hasten the sell-by dates of those of today’s directors who cannot adapt. The cost of failure will erode profits and shareholder value. Fiduciary duty recognises that long-term business value depends on the maintenance of social and environmental value. The next generation of investors and consumers will be judging them on this.
• Hetherington and Morar are co-founders of Sustainable Strategy Partners.
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