How Boards can think long-term for strategic decision-making
Anna Triponel
February 7, 2025
The University of Cambridge Institute for Sustainability Leadership (CISL) - an impact-led institute that works with leaders and innovators across business, finance and government to accelerate action for a sustainable future - published Future of Boards - From Box-Ticking to Sustainable Value Creation: The Use of Relevant Impact Data and Wider Information in Strategic Decision-Making (January 2025). The report looks at how boards can use sustainability-related impact data and wider information to inform and integrate sustainability-related factors (impacts, risks and opportunities) into overall company strategy, and decision-making. A list of 20 questions (which can be found at the end of this weekly update) is provided in the report to help boards assess their own thinking and practice in this area.
Human Level’s Take:
A recent survey by the UK Institute of Directors finds that sustainability is just good business. A majority (61.5%) of board members believe integrating sustainability risks and opportunities is key to profitability, while 60.1% and 58% incorporate environmental, social and governance (ESG) risks and opportunities, respectively, into strategic decision-making.
Yet, despite this recognition, many companies still treat sustainability data as a tick-box exercise - focusing on compliance rather than using it to drive real business insights and resilience. This can be due to short-termism taking precedence over long-term vision, compliance overload, mindset barriers and difficulty accessing good sustainability data.
So what can boards do to better integrate sustainability data into their decision-making? 1) Revisit the purpose, governance and ownership structure of the company; 2) Strengthen board capability on digesting and acting on sustainability data; 3) Enhance access, presentation and use of sustainability data by, for example, setting clear sustainability key performance indicators (KPIs); 4) drive collaboration across sectors and supply chains to standardise sustainability data collection and reporting frameworks; and 5) Support purpose-driven startups and small and medium-sized enterprises (SMEs) by, for example, providing guidance and case studies on good practice.
Boards that take these steps can future-proof their businesses, ensuring resilience in an ever-evolving global landscape.
Some key takeaways:
Boards proactively addressing sustainability risks and opportunities is necessary for short and long term business resilience: A survey ofmembers of the UK Institute of Directors shows that the majority (61.5%) of board members believed that the integration of sustainability risks and opportunities is essential to the delivery of their company’s profitability. 60.1% and 58.2% of board members shared that they incorporate environmental, social and governance (ESG) risks, and opportunities, respectively, into their overall strategic decision-making. However, the research shows that businesses often collect sustainability impact data as a ‘box-ticking’ exercise to fulfil legislative compliance requirements, or the needs of stakeholders such as clients, shareholders, or other finance providers. This approach contrasts with one that harnesses this data to better understand the sustainability impacts, risks and opportunities to which businesses are exposed. The report highlights good practice from twelve company boards in the food sector on ways that they are approaching sustainability impact data in their decision-making. They are: 1) using sustainability impact data, and wider information, to inform their strategic direction and decision-making; 2) seeing sustainability-related reporting legislation, and other reporting requirements, as useful tools to incorporate wider sustainability impacts into their thinking; 3) receiving and exploring ‘decision-useful’ sustainability impact data, alongside financial metrics; 4) using data and information sources beyond those required for compliance; innovating new metrics; and working with higher education and other partners to create new knowledge to inform strategic decision-making; and 5) harnessing stakeholder information and ideas, and horizon scanning for sustainability trends or opportunities. In addition, boards are adopting various methods to maintain a long-term focus on creating positive sustainability outcomes in the face of competing short-term, and often financial, pressures. These are: 1) addressing sustainability factors as a full board, not only in separate committees; 2) making sustainability core to the value proposition of the business to design out trade-offs; 3) having shareholders and other investors who share similar values; and 4) designing governance and ownership structures to better ‘lock in’ a sustainability mission or purpose and limiting the ability of shareholders to privilege short-term returns over sustainability impact.
Challenges which make it difficult for boards to integrate sustainability impact data into their decision-making processes: There are widespread challenges which make it difficult for boards to fully integrate sustainability impact data and wider information into their decision-making processes. These include: 1) pressures from a volatile, uncertain, complex and ambiguous operating environment, as well as the expectations of some finance providers and shareholders, that can result in a short-term survival focus; 2) heavy compliance burdens that may distract from strategic thinking and risk assessment; 3) a board mindset that does not recognise, or fully understand, sustainability risks and opportunities; 4) challenges with data access, trust, assurance and synthesis into ‘decision-useful’ insights and implications, as well as data and information gaps; and 5) immature frameworks to support and enable strategic decision-making that integrate financial and sustainability data and wider information.
So what can boards of companies do? To better integrate sustainability impact data into decision-making, companies can consider doing the following:
Further thinking about purpose, governance and ownership, which can include revisiting the company purpose or mission to ensure it incorporates sustainability dimensions; engaging with investors who are aligned with long-term sustainable value creation; and changing the legal form, governance, or ownership models of the business to ‘lock-in’ a sustainability-related mission or purpose;
Improve the board’s ability to absorb and reflect on sustainability-related data and wider information. This could entail increasing collaboration and peer learning between board members from other companies and organisations; creating space in board meeting for blue-sky thinking, scenario planning and thought experiments; including independent non-executive directors from a wide range of backgrounds, experiences and geographies to provide different perspectives; and developing the board’s role in horizon scanning or ‘strategic foresight’, and bring in wider perspectives through, for example, a formal sustainability advisory board or panel, or external experts;
Improve sustainability impact data access, presentation and use such as having clear sustainability-related key performance indicators (KPIs) and make use of comprehensive dashboards; overseeing the development and use of decision-making frameworks that enable integration and comparison of environmental, social and financial value; explore the role of digital technology and artificial intelligence (AI), while also recognising the inherent biases and limitations of AI; and developing ways to address the hard choices and trade-offs which involve sustainability-related factors over the short and long term, and be transparent about the decisions made;
Engage in pre-competitive collaboration within sectors and supply chains in order to support sustainability-related data collection frameworks and metrics;
Develop a supportive ecosystem of advice and finance for purpose-driven start-ups with a focus on how the board role and composition could evolve, collaborative ways to support sustainability-related data collection and wider information, and considering the most appropriate legal model, governance and ownership structure to maintain and develop purpose and impact over the long term; and
In relation to SMEs, providing guidance and case studies on how to harness sustainability data to support innovation in products, services or business models; increasing focus and guidelines on supply chain journeys to, for example, net zero; and expanding research to shape regulation, government policy and procurement, and international reporting frameworks to support SMEs on their sustainability journey.
