Only 17% of Board Directors Can Handle These Issues – A Discussion with Helle Bank Jørgensen

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Allison: Welcome back to the Deliberate Leaders podcast. I am your host and Executive Coach Allison Dunn, I am pleased to introduce our guest today we have with us Helle Bank Jorgensen.

She is an international recognized expert on sustainable business practices, and boasting a 30 year track record of turning environmental, social and governance, which we also coin as ESG risks into innovative and profitable business opportunities. She is the Founder and Executive Chief Executive of Competent Boards, and an accolade in 2020, she was awarded the Global Impact Award, and named as five people in the ESG. Look for her new book Stewards of the Future: A Guide for Competent Boards. Helle, thank you so much for joining us here today.

Helle: Well, thank you so much for having me.

Allison: Fantastic. So I feel like we’ve kind of as from like a podcast standpoint, we’ve had the opportunity to dive into just general board concepts. But I love the fact that we’re going to kind of dive a little bit deeper into the ESG side of like, a lot of people, I think, a lot of conversations about it, but maybe not everyone quite understands it. So I’m hoping you can enlighten us in some of that. So the statistic, when we kind of set up this, this podcast, and it was something about 70% of board directors are not skilled to handle some of the looming profit killing issues in the world today.

Helle: Actually, it’s yes, well, so. So that was the data back in 2020. And at that point, this organization went out and looked of the 100 largest companies in the world, how many of the board of directors, so those that have the job of overseeing the company overseeing management, how many of those serving on a committee in charge of overseeing environment, social governance issues, actually were had the competences or had the consciousness as they were actually coding it. And that was 17%, the year after, so 2021, they did the same, it actually had grown to 40%.

So for zero, however, that was who is conscious, who knows a little bit about this, but it when it comes to how many have any kind of real education in these issues? It dropped to 8%. So we’re looking at a thing where I went out at a point and said, you know, if we only had 17% of those board members that were overlooking the financials, that understood how to read an income statement, how to read a balance sheet, would we be happy with that?

And I think most of us, even though if we’re not financial, we will say, well, it might be a good thing to just know a little bit about how to read some of that. And it’s the same thing when it comes to the whole environment, social governance space, how do we ensure that we have the insight that we have the foresight to provide this oversight, that is what the job of board of directors is all about?

Allison: Yeah, I think you also brought up a really great point about who has the power inside of an organization. And we often think it’s the CEO. But it’s not it is the board, right?

Helle: Well, I mean, of course, the CEO is the one that ended management team and all in the company as the one that driving the day to day and doing all of that. But from a governance point of view, we have the Board of Directors being elected to oversee, and ensure that everything is, you know, the best interest of the corporation. So yes, you’re right. Often we don’t think about that. But it’s coming more and more up now. And more and more of the board of directors are looking to see how do we ensure that we provide that oversight that’s expected not only by shareholders, frankly, also by the employees. Right.

So customers and those that finance the companies in terms of everything else, so it’s getting from being a role we did not really know what who was serving as the board of directors to be much more people asking where were the board? Why didn’t they do anything? Why didn’t they say anything? And that’s why the book you mentioned, Stewart’s of the future, a guide for competent boards, kind of like to help board of directors to understand all of these new aspects, because we shouldn’t, you know, think about that everyone knows everything. In the same way, as you do not know everything I do not. I definitely don’t. Right. So we need to make sure that we on a constant basis, get that insight. And many of those that serves as board of directors, I know my age, and perhaps a little bit older than that. And we’ve not been taught how to look into environmental social governance issues in the same way as many of the young people are being taught today.

So having that understanding is just so important in order to ensure that your world and the world of all of the younger generations and their kids are up, Stewart, in a way that’s it’s a good place for be both to work, but also to live. So if we look at some of those attributes of these stewards of the future, one thing is to have the competence, right, understand the subject matters, not only by asking questions, but also knowing what are you actually looking for? That comes with being, you know, curious, you need to be curious on like, what’s really going on in the world, you need to be able to listen, you know, we have two years.

So listen to what’s going on, observe, and then being courageous. And that’s one of those things that that moment where we really need to make sure that we both have the confidence, the curiosity, the competence, but also the courage to say, what is it that we want to see in the future? And that’s where we have this short term, long term debate all the time? What are the dilemmas that we’re looking at? How do we ensure that again, we do what’s best for the corporations for the stakeholders, and of course, also in that sense for the shareholders.

And I believe that if we, if we have directors, we have the management that understand that interconnectedness between all of those different areas, then we actually driving value, not only financial value, but value for the different stakeholders, both in the short term and the long term. And hey, what’s not like with that?

Allison: Very true. So I appreciate it’s not necessarily only having the knowledge but having the attributes to be curious about the about what we need to understand. And I very much appreciate that. That’s, that’s good. Why do you think it’s more important than ever for boards to have the environmental, social and governance oversight and insight? 

Helle: I think if we look at the world around us, there’s no doubt you and I before we got on here, we talked a little bit about the younger generation. We’re young too, right? But you seeing that a lot of especially the younger generation, they want to not leave the values when they go to work, we have just been through a pandemic, some of us are still, right, where you don’t go into your living room and say, oh, now I’m in a different person you want to bring yourself to work. So that’s, that’s one.

The other thing is that you as a consumer, think about what are you actually buying, what are the things that that are important to you? Then think about you as an investor, what do you invest in? So we are seeing a trend of going through words ESG. So environment, social governance, that we want to we want to see that not as a score, but we want to understand what is risk, what are the opportunities, we can also say sustainability, how much does this company do? We talk about climate and climate change? And again, there you see, it’s basically also the younger generation that are pushing and saying, is this the world that you will leave us?

So that’s from that that angle, then if you look at it from a regulatory point of view, we have, you know, now laws regulations in different countries that starting to come up with companies are to disclose what are they doing? So from a board of directors point of view, you have the duty of care. And you need to care about these different areas. And you need to be able to ask the questions to ensure that you have that oversight that I talked about, and as you said that the inside to how to do that as well and the foresight, because that’s, that’s what’s going to set you apart.

Do you have directors? Do you have management, that are able to not only look at to what did we do yesterday? But what was it will look like in a few years from now? What will our consumers want? What would I, our employees want? And are we able to give that or everything we do? What was good a few years back?

Allison: I think that many companies that don’t have a board, those are the types of questions that honestly at the end of the day, like they put themselves at risk by not having a collective that is thinking about it, regardless of whether it’s a board that has the authority to fire you or not, right.

Helle: And we can all do it. Now. Now you and I talked about it, as you know, Fishel, the Board of Directors, right? Right, you and your business. Now you can ask yourself two questions, you can also have your own little advisory that Zheng so Ellie, what are you actually doing in disregard of you know, what is it that that people want? What is it that your customers want? Now, what will your customers one in a few years, to we especially when we talk about climate, we talk a lot about a transition plan to a net zero economy.

But it’s the same here, you can talk about what is our transition from where we are today to where we want to be in X number of years, you can do that with a business, you can do it with your own career. It’s just a way of looking at it and making sure that you both have the short term and the long term goals. And you know, how are you going to get there?

Allison: I am so super curious if you would share some of the things that you that you’re hearing around your board table or thinks that four tables should be discussing to address what you perceive as the biggest risks and the biggest opportunities of our time of our decade of our near future.

Helle: So I have the great pleasure of educating board of directors, educating business leaders, know future board of directors, investors and others. And we do that by taking them through different areas, everything from geopolitical, and right now we are unfortunately in a situation with war in Ukraine. Where, you know, if you don’t understand the geopolitical, you’re missing out a bit. What are the dilemmas that’s coming up? What are the expectations for Board of Directors, for executives, for investors? And what’s the expectation goes to and from them, then you can go in and talk about environment, social governance, climate change, human rights issues, supply chain issues, diversity, equity inclusion, there are in terms of how do we deal with responsible use of data? How do we deal with cybersecurity? How do we ensure that we have the right incentives in place in a company? What do we do in terms of the future of good corporate governance?

Again, all of these areas are some of the areas that we’re going through. And the same we have a program for climate change, we understand what it is why it is how to deal with what all the disclosure, so all of the shareholder and stakeholder engagement and disclosure you need to have in place. So we take you know, the board of directors and future board of directors and executives through that program. The most important for me is to actually see that interconnectivity between all of these different issues is what often Have in a company is that we’re saying, Okay, now we need to deal with diversity, equity inclusion. Okay, let’s deal with that. And then we’ll put that to Zod and then we’ll deal with something else.

And that means that we are missing out, we are leaving money on the table, and we, frankly leaving innovation and you’re leaving the motivation of your employees, and a lot of innovation for your customers on the table. So for me, it’s important to give your everyone that mindset of how do we look at these different things? How do we know what questions to ask? What are the questions that will bring us from where we are now to where we want to be? That’s, that’s to me, the factually the most important.

Allison: I just want to make sure that I translated what kind of what you just said, based on like most companies are addressing like one pillar at a time. And by not looking at it from a holistic standpoint, they’re missing the opportunity to have a full discussion, as opposed to just looking at it narrowly. Is that is am I translating correctly? Okay?

Helle: Yes, you are. And I think, not saying that we should not look at it as a separate part. But that not having these silo discussions will bring that we have what we call integrated or like integrated thinking and that integrated thinking is the ones that really bring the diversity of thought that brings the innovation and creation. And that’s fair, I would, I would sincerely agree that in, in discussions with companies across the US they are they are focusing on one thing at a time, as opposed to integrating the whole the whole conversation. And I don’t think that I would have recognized that in two separate.

Helle: There are real lot of leaders and this is not easy, right? Because you can big pie to eat at one time. There’s a lot of Exactly. And that’s also why I mean, this is not about eating the whole pie at one time, it is about having that look at it from the viewpoint, the mindset, then start to see what are the most mature areas who in the organization are looking at what, but then connecting the dots. And I think that’s what you probably see is that well, there’s department working on this, there’s another department working on this, that do not talk, right? If we can make them, you know, talk and one plus one gets to be more than two. That’s where you start seeing the value creation.

These also the risk in all of this. And we’re seeing it more and more that if the if from the Tone at the Top do not really set out not only the purpose, but what is it that from a company point of view or different policies, procedures, we might have that company do one thing in one department or one part of the world. And another thing and another part of the world. And let’s say that it’s in one part of the world, they say, this is what we stand for. And in other parts of the world, they’re doing exactly the opposite. That’s a huge reputational risk.

So get the ducks in order and make sure that everyone know what what’s not only the purpose, but what are these areas? And how do we deal with them? And that’s where you can say, we’re talking a lot about disclosure at the moment. For me disclosure is not the end game. For me disclosure is a part of how do we manage? Because you know, we measure, then we manage, right? So

Allison: We’ve kind of brought it up in a couple of times in this conversation. So I’d like to just spend a moment about what you perceive as the opportunity to tap into our younger generations and maybe even individuals who have no board experience whatsoever and what could that benefit an organization?

Helle: Huge.I think I said before, you know, we need we need to listen. But we have so many fantastic younger people that frankly, really smart and that can bring a lot to organizations and we can listen to younger organization, we can bring them into the boardroom many, many different ways. One is of course, having those discussions, many of these faculty and I have a Faculty have over 180, board directors, leaders, etc. Many of them are saying that they are having, you know, discussions with some of these younger people in the organization to really understand how are we living our values? Are they happy when they go to work? Because the second, they’re not as plenty of other opportunities for them at the moment.

 So that’s one simply listening, you also have reverse mentoring, where you actually can say instead of you’ve been men, you’re mentoring younger, you’re being mentored the other way around. That’s another way. And of course, you can bring in in terms of things as an observers, and then yes, you can have as board members or observers at the board members that then can be trained to really give that insight.

And I think, bringing in the fresh perspective, a fresh perspective into the boardroom is so important. But of course, we also need to make sure that everyone understand all of the duties that sits around the boardroom table. So it’s a mutual understanding in that regard. But there’s so much value to be should be by bringing in those voices as well.

Allison: And I’m glad we kind of have spotlighted that I do think inside of many of the companies that I work with that is clearly one of their number one opportunities for sure. So hello, is there a particular way that people could connect with you? Is there a preferred platform for people to find you?

Helle: Well, sure, clearly in terms of competent boards, and where they both can find in terms of our training programs for board of directors and for business leaders, investors, but also about the book Stewart’s of the future that is competent boards.com so competent, boards.com and can connect with me as well as competent boards on Twitter and on LinkedIn. And for me, it would be Helle Bank Jorgensen and for competent boards, competent boards. So and we might be on other social media as well. I’m quite sure that will be on our on our website.

Allison: I promise to include all of those links in the show notes as well as any of her social channels. So please do reach out. Helle, thank you so much for your time today. I love our conversation. I think it’s a new topic that I’ve not didn’t kind of really provided any depth to and I appreciate you helping us do that today.

Helle: Well, thank you so much for having me.