What Directors Are Thinking.

ERTHARIN COUSIN

INDEPENDENT DIRECTOR: Bayer SA, Mondelez

By now, everyone should recognize the mounting science and anecdotal evidence of an accelerating global climate crisis. Yet the role of corporations in addressing our climate challenges is evolving. It is too often unclear and at times controversial. However, the data clearly suggests that, as a function of its risk and oversight responsibilities, a public corporation's board of directors maintains a duty to help management navigate these complicated backwaters, including guiding thoughtful approaches to ESG considerations--not only in response to societal demands, but more importantly as a means toward proactively ensuring long-term stakeholder value.

As a corporate board member, I was elected by shareholders to provide fiduciary duties and care about the long-term value of the business. This includes addressing concerns regarding ESG, including the climate space. Indeed, in the last few years, there has been a marked increase in shareholders demanding more intentional ESG practices from corporations. Additionally, many of the largest sovereign funds and fiduciaries have increased their expectations of their shareholdings on the issue of climate change. We see a growing number of large and influential investors--from Temasek Holdings in Asia and Norges Bank Investment Management (both sovereign funds), as well as BlackRock --demanding measurable decarbonization action plans from companies in which they are invested. In fact, a group of investors acting under the banner of Climate Action 100+ have managed to unite 700 investors behind a call for climate action.

These and many more examples of shareholder actions resoundingly convey a message that boards of directors--and the businesses they...