Non-financial risks and opportunities, including those related to inequality, climate change, environmental harms, biodiversity impacts and artificial intelligence are becoming increasingly more relevant considerations in corporate governance. To ensure that these risks are properly understood and managed, and that opportunities are maximised, company boards must fully integrate sustainability considerations into company operations, planning and resource allocation.
Board-level sustainability expertise (i.e., relevant knowledge obtained via formal qualifications, skills and experience) is essential to this endeavour, and requires that companies ensure that their boards are appropriately capacitated. The lack of such expertise on Top 40 company boards raises fully integrate crucial sustainability considerations into their strategies and decision-making.
In most corporate governance contexts, the knowledge associated with expertise is closely correlated with a suitable formal qualification. A business degree is generally regarded as necessary to having business expertise, financial expertise is associated with having a chartered accountancy or finance-related degree, and a law degree is associated with legal expertise. There is no reason why sustainability expertise should be approached any differently. However, many companies claim that their boards contain sustainability expertise, without specifying what this expertise is or who holds it.
Using publicly available data, Just Share has analysed the qualifications of the members of the boards and social and ethics committees of the Top 40 JSE-listed companies to assess how many of their directors have sustainability-related qualifications.
The analysis revealed that:
- 22 of the Top 40 companies (55%) do not have a single director on their boards who holds a sustainability-related qualification.
- Out of a total of 487 directorship positions in the Top 40, only 25 positions, or 5%, are occupied by directors with a sustainability-related qualification.
- Of the 989 qualifications at diploma or higher level held by all Top 40 directors, just 41 qualifications (4%) were sustainability-related qualifications. The vast majority of directors’ qualifications are in finance and business (67%), followed by engineering (8%) and law (7%). 35 of the Top 40 companies (88%) do not meet a modest sustainability expertise benchmark of having two directors with a sustainability-related qualification on the board.
- Directors with sustainability-related qualifications do not always sit on their company’s social and ethics committee.
- Corporate disclosures about sustainability experience are weak, making it difficult to draw conclusions about this dimension of sustainability capacity. Many companies claim that their boards contain sustainability expertise, without specifying what this expertise is or who holds it.
