Erasing the Problem - Pollution, Plastics and Polystyrene
Globally, the management of recycling and the re-use of materials has been an overwhelming issue.
With vaccine mandates, traffic light systems and a growing talent crisis dominating much of the focus for 2021, the Institute of Directors is keeping New Zealand boards firmly on track with the ‘Top Five’ issues all directors should have front of mind in 2022.
Institute of Directors CEO Kirsten Patterson says there is no time for directors to take a ‘business as usual’ approach in 2022.
“Boards will have to continue tackling those knock-on effects of the pandemic such as the talent shortage and supply chain disruption, but also keep those issues such as climate change firmly in their sights.”
The Institute of directors (IoD) top five issues for Directors in 2022 is developed by experts from IoD’s Governance Leadership Centre and is informed by results from the Director Sentiment Survey report 2021.
In signing New Zealand up to halve greenhouse gas emissions by 2030, the Minister of Climate Change Hon James Shaw warned that this decade is “make or break for the planet”. Boards will be waiting to see the Government’s Emissions Reduction Plan (ERP) due out this year but it’s clear that ambitious targets will drive the demand for more climate disclosures and scrutiny at a governance level.
Momentum on climate reporting is also being driven by the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021, which brings in mandatory climate-related disclosures for large listed financial companies.
“All businesses will need to be resilient and sustainable in a low-carbon future, and there’s no time like the present to start getting your house in order,” says Ms Patterson.
“In 2022, benchmark the climate capability of your board and executive team to identify where you need to build competency and take time to understand the improvements needed across your organisation to drive sustainability.”
One of the major knock-on effects of the pandemic continues to be supply chain issues, identified by 17% of respondents to the Director Sentiment Survey 2021 as the single biggest threat to their organisations.
Maintaining links with suppliers will be crucial in 2022, and boards should leverage international connections to keep one step ahead of risks that may emerge – reducing the impact of problems as they arise.
“Assess your reliance on those ‘just in time’ materials, or materials in high demand and adjust your strategy accordingly. And if you do need to travel or send staff overseas, stay up to date on rules around testing and self-isolation – always have a plan to get back home,” says Ms Patterson.
An employee-centric approach will be needed in 2022 as organisations continue to grapple with retaining key staff and attracting new talent.
“If you want to retain your best employees, make sure your managers are up to scratch. Boards should set the expectation that management take an employee-centric approach and that remote working policies reflect employee expectations and needs where possible,” says Ms Patterson.
Purpose and values, and culture and inclusion will continue to underpin board leadership in 2022 and set the tone for an organisation. In the Director Sentiment Survey report 2021, over half (54 %) of respondents through the boards should speak out on social issues such as income inequality, housing, trust and racism.
“Society is demanding more of our leaders now and there is definitely an expectation that boards and directors go well beyond just legal compliance. A strong ethical focus needs to be seen coming from the top, and that culture should start in the boardroom,” says Ms Patterson.
Boards can expect to see increasing activity from regulators in 2022 with extending remits, better resources and increased enforcement powers. Best-practice for directors in 2022 should include proactive self-reporting, early engagement with regulators and having a plan in place for responding to enquiries.
“We saw regulatory actions against companies and directors on the rise in 2021, and we can expect that to escalate in 2022. Make sure you have processes in place for managing any issues that require escalation to the board and any regulator,” says Ms Patterson.
See more on the IoD’s top five issues for directors in 2022.