By Shefali Goradia and Viral Thakker,

Climate change affects livelihoods, health, and the future of human lives, involving the physical environment and social and economic systems. Globally, executives face challenges posed by the climate crisis such as economic uncertainty, geopolitical conflict, resource scarcity, and supply chain disruptions. The escalating global cost of climate inaction underscores the urgent need for a global shift towards sustainability and net-zero emissions. Close to home, a recent Deloitte research estimated that inaction could reduce India’s GDP by $35 trillion by 2070, while a transition to net-zero emissions could potentially boost the country’s GDP by $11 trillion in the coming decades. These findings accentuate a critical juncture for boards and chairs, positioning corporations as both beneficiaries of this transition and catalysts for the shift towards a resilient, low-carbon future.

Our conversations with over 230 chairs of major global companies between 2022 and 2024 reveal that these leaders and their boards recognise the need to integrate climate action into business strategy. However, they continue to face near-term challenges, such as investment costs, lack of persistence, and pressure for short-term results. Moreover, 40-50% of the climate technology and innovation needed to achieve net-zero by 2070 is still developing.

Our research reveals that 81% Indian CXOs reported increased sustainability investments from the previous year. Meanwhile, 68% organisations are integrating sustainability strategies and mechanisms into their operations, and 80% report on it. Notably, amid continued disruption and competing business challenges, 57% Indian CXOs ranked “climate change” as a “top three priority”, ahead of “economic outlook,” which is significantly higher compared with the ranking from global executives.

As brand custodians, chairs can shape the board agenda to align short-term goals with long-term sustainability vision.

Sustainability focus, with an  eye on long-term strategy

Chairs are guiding their organisations through climate adaptation, mitigation, and resilience, indicating a shift in the core objectives of corporate governance, with sustainability becoming a strategic priority. They are also leading their boards in integrating climate considerations into business strategies and cultivating a culture that values environmental responsibility. By securing executive sponsorship and buy-ins, leaders are aligning individual goals with organisational ones to make climate change an operational imperative for the organisation.

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Capital allocation is another critical area where the chairs are making a significant impact. By integrating climate risk mitigation and adaptation into investment decisions, they reshape financial planning to align it with sustainable practices. Focusing on robust environmental, social, and governance metrics and high-quality disclosures, they can effectively communicate their sustainability efforts to investors, building trust and attracting capital from those prioritising accountability and transparency. This approach enhances the company’s reputation and contributes to long-term profitability and resilience.

Beyond governance and capital allocation, chairs are reimagining long-term business models to prioritise sustainability. This approach includes corporate alliances and public-private collaborations, expanding sustainability efforts beyond traditional boundaries.

Staying ahead of regulatory environment

As governance evolves, board members are enhancing climate expertise by establishing climate action committees and empowering executives to navigate a dynamic regulatory environment and drive sustainability initiatives. Chairs are reinforcing the importance of climate action at the executive level, making it a critical component of corporate operations.

Appointing chief sustainability officers indicates the growing importance of dedicated leadership for climate-related initiatives. This role provides a clear charter to champion sustainability principles. Chairs are advocating distinguishing the sustainability charter from corporate social responsibility, recognising that sustainability and climate issues directly impact business operations and investor confidence.

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Applying climate lens on the chair’s role

To provide a climate transition framework for the chair of the future, we have delineated emerging facets of the chair’s role, focusing on vision, culture, trust, guardianship, and crisis management. Vision provocateurs inspire boards to embrace comprehensive climate risk and resilience integration, setting a business case and vision for sustainability. Culture and talent cultivators ensure that employees are aligned with the company’s sustainability objectives. Trust torchbearers build stakeholder trust through sustainable practices and transparent communication, establishing credibility and nurturing long-term relationships with investors, customers, and the broader community. Guardians oversee compliance, ensuring that climate commitments are met. As a crisis compass, they focus on resilience and adaptability, navigating crisis with a climate and sustainability lens.

These roles help chairs foster organisations that thrive amid the climate crisis and respond well to stakeholders’ needs. By embracing these roles, they can steer their organisations towards long-term viability and resilience to address pressing global challenges.

In conclusion, the climate crisis is driving transformation in boardrooms, addressing the urgent need for climate action and positioning companies for long-term success. By maintaining focus, staying updated on regulatory changes, equipping board members to address climate challenges, and using unique global insights, chairs can lead their organisations toward a sustainable and profitable future.

Shefali Goradia and Viral Thakker are Respectively chairperson & partner and sustainability and climate leader, Deloitte South Asia.

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