2021 was a complex year for boards, most of which grappled with the evolution of hybrid work, digitalization, and ever-changing global perspectives. 2022 is set to be no exception–the new year will not be without its trials and tribulations that will require boards to recalibrate their priorities, tools, and methods.
ESG: A top priority for boards in 2022
Successful boards are putting ESG objectives at the top of their priorities, as global attention and climate risk concerns have reached a historic high. Some boards, particularly those in highly regulated industries, have taken ESG issues seriously for years. In 2022, it will be the norm for all boards to engage regularly with ESG considerations.
Boards have begun moving beyond crisis mode and are starting to shift the attention back to critical ESG topics. Sustainability and corporate responsibility were prominent themes throughout the last year, and 2022 will involve putting plans into action and carefully choosing KPIs for the reporting of Environmental, Sustainability, and Governance initiatives. In PwC’s Annual Corporate Director’s Survey conducted in 2021, 62% of directors said that ESG topics are a regular topic of discussion. Additionally, 52% of corporate directors interviewed believe there is a strong correlation between ESG topics and financial outcomes.
As the survey shows, many directors already see a correlation between a company’s ESG performance and financial results. To reap these dividends, boards will need to review the findings of their committees regularly, focus on setting goals to drive positive change and create a culture of transparency within the organization that encourages members to speak out when they identify areas of improvement.
Directors need to keep ESG topics on their agendas and at the top of their priorities. ESG quickly becoming a top priority for boards—in part because it’s becoming easier to measure and because it’s increasingly clear that ESG efforts pay off. That said, success means perseverance.
More diverse boards
Diversity is another critical priority for boards in the new year. Public opinion on implementing more diverse boards has seen a significant shift, with 71% of users surveyed in 2020 believing “no action is necessary—boards will naturally become more diverse over time.” In 2021, only 33% of those interviewees shared that same sentiment. 2021 saw substantial gains for board parity, and hopefully, the momentum will continue into this year.
2021 was a watershed year for diverse boards, 2022 is setting up to be another. While there is still ample room for improving board diversity, this shift in opinion suggests that the change will be a more proactive one. Boards are no longer willing to choose stagnation over progress.
Digitalization: A key to success in 2022
As the world shifts into the post-pandemic normal, technology has permanently placed itself in the boardroom. While boards had no choice but to adopt technological alternatives during the pandemic, the benefits of IT in the boardroom made themselves powerfully clear in the past couple of years.
“Digital transformation is not just about adopting new technologies. Its significance, especially in the business world, extends to how technology can be used to create-and sustain-a competitive advantage.”
Technology has become a powerful tool for directors–particularly when it comes to fluid and secure communication and collaboration in increasingly hybrid environments. With heavy agendas on the table for 2022, board members are using the digital shift to their advantage.
The benefits that technology has delivered to board meetings are numerous and often unexpected. Beyond the simple communication aspect of instantaneous messaging and video conferencing, other innovations such as Board Portals, document management systems, and analytics software deliver real-time data with just a click. As information becomes more relevant and accessible in today’s constantly changing business world, it is imperative for boards to keep up or face the consequences.