Weekend reading: ‘E’ is not for easy
Environmental, social and governance issues are increasingly important for companies, and a decision in one of the three aspects of so-called E.S.G. often has implications for the others. The more that board members can see these connections, the more likely they’ll act in society’s interest, argues the economist and author Dambisa Moyo, who also sits on the boards of 3M and Chevron. The same goes for stakeholders who want companies to be better citizens.
Moyo spoke with DealBook about her new book, “How Boards Work: And How They Can Work Better in a Chaotic World.” The interview had been edited and condensed for clarity.
DealBook: What do people misunderstand about how boards work?
Moyo: People’s perception is quite facile but it’s important to understand the array of issues and what levers they actually have, the complexity and range of decisions board members face and their limits. In my time on boards in different industries and countries, I’ve seen almost every crisis except bankruptcy, along with the rise of the E.S.G. agenda.
What’s the most important attribute in a board member?
Good judgment. You can’t be dogmatic. You have to be flexible and pragmatic.
How is running a company different today than before?
Corporations have always been part of the communities and societies they operated in. But in areas where the government was leading before, for a whole host of reasons, companies have been stepping up, for example with E.S.G. issues.
What’s the story with E.S.G.?
People often don’t realize how the different goals interact or create second-order problems. For example, when students at Oxford University constantly encourage the endowment to defund energy companies, they don’t think about the 1.5 billion people in the world who still don’t have access to power, and how that influences diversity and inclusion. They see no connection. But the kids from energy-poor countries are not going to make it to Oxford that way.
Is it all too complex?
I’m very optimistic we can get there. We need to be less hasty and more innovative. I do think we need to create some kind of framework that supports society and has teeth. And, most importantly, that’s sustainable.