The Global Association of Risk Professionals (GARP) publishes regular articles from guest writers on its Risk Intelligence content hub. In September 2024, they published an article by Director of the CCE, Emily Farnworth, about strategic planning in the boardroom to accelerate the transition to net zero.
Article: A new dawn for strategic planning in the boardroom
Technological advancements as well as changes in reporting requirements and legal expectations are pushing companies to incorporate more long-term thinking. Where are these pressures coming from and how can directors integrate them?
Key points include:
- Balancing short-term financial pressures with long-term sustainability is a critical challenge for corporate boards. While immediate business needs often take precedence, companies that take bold, forward-looking investment decisions—particularly in sustainable technologies—stand to benefit not just financially but across broader social and environmental dimensions. Research shows that businesses with strong carbon management strategies have seen tangible long-term financial gains and reduced risks.
- Integrating long-term risks like climate change into business strategy is crucial for future success. Companies often focus on short-term risks, overlooking the larger, transformative threats that could disrupt industries. By adopting a systems-thinking approach and treating climate-related risks with the same rigor as financial obligations, businesses can align strategy with sustainability, meet growing transparency expectations, and build trust with stakeholders.
- While company law remains unchanged, the context in which it operates has evolved, with increasing climate litigation and scrutiny of corporate environmental impacts. Boards must stay informed about advancements in climate science, policy trends, and technology to ensure their decisions are aligned with current regulations and future sustainability challenges.
- The tension between short-term and long-term decision-making is a major challenge for businesses, but also an opportunity. Companies that adopt governance structures focused on long-term sustainability and embrace transformative strategies will be better positioned to thrive in a transitioning economy, creating lasting value for all stakeholders.
About GARP
GARP is the world’s leading professional association for risk managers, dedicated to the advancement of the profession through education, research, and the promotion of best practices. It currently has over 279,000 members spread across 195 countries and territories.
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