The New Board Game
How to adapt, behave, and relate in the post-pandemic boardroom
Your board will need to focus on making less money
- a bit shocking that, isn’t it?
- I mean, maximising profit has been the mantra of boards forever. How could this possibly change?
- The system is geared towards a laser focus on the bottom line: incentives, bonuses, options
- The markets keep score based on valuations based on profit
- Investors want an exit at the highest return
- Even the most pro-ESG commentators link “doing good” with the logic that it will drive higher profit
- ESG is good for business, don’t they say?
It’s all tosh.
If there was money in ESG, everyone would be “at it” already
- taking care of the environment, properly, costs money
- The E in ESG will hit your P&L
- paying/hiring/treating employees equally, fairly, and inclusively costs money
- The S in ESG will hit your P&L
- good governance costs money because doing the wrong thing makes people very rich
- The G in ESG will hit your P&L
- if your profitability improves because of these costs – it may/may not – that will be a collateral benefit/cost of ESG and not a business case
ESG doesn’t need a business case, so stop making one
- You don’t make a business case for an elevator in your office block, do you?
- You don’t make a business case for wifi, do you?
- You don’t make a business case for maternity/paternity leave, do you?
- Protecting the environment is becoming no longer optional for boards
- Nor is protecting society any longer a buy/don’t buy decision
- Nor is good governance an a la carte exercise.
There will be a new heading in your P&L narrative: impact of ESG costs on profit and reputation. Are you ready for those conversations in your boardroom?