The New Board Game Blog 2: Less profit, more impact

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?

Ciarán Fenton

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