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Why boards must take the lead on sustainability to ensure long-term success

Why boards must take the lead on sustainability to ensure long-term success

Why boards must take the lead on sustainability to ensure long-term success
Sustainability must be viewed as more than just compliance; it must become an engine of innovation and competitive advantage. 
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Environmental, social and governance considerations have evolved from peripheral corporate concerns to central elements of business strategy. However, in some cases, a significant governance gap persists between commitments to sustainability and accountability at the board level.

Boards that continue to delegate sustainability to operational committees fail to fulfill their fiduciary duty to oversee it effectively. This gap in accountability at the highest levels is increasingly recognized as a key challenge for corporate governance.

A 2023 PwC survey found that 64 percent of directors recognize climate change as a significant business risk, yet only 38 percent report that their boards possess expertise in ESG matters. This gap exists despite growing investor demands for climate accountability.

Corporate sustainability pledges are often ambitious, but they are not always met. Board oversight remains insufficient. According to recent research, 71 percent of institutional investors believe most companies overstate their ESG progress, reflecting a lack of credibility in corporate sustainability governance.

Further illustrating this point, a 2024 study revealed that only 23 percent of S&P 500 companies link executive compensation to ESG metrics, and just 17 percent have a board member with significant ESG expertise. Without proper accountability at the highest levels, sustainability measures risk becoming mere greenwashing.

In response to these challenges, shareholder activism on ESG issues has surged, with climate-related proposals at S&P 500 companies increasing by 88 percent since 2020. Regulatory pressures are also mounting, with the EU’s Corporate Sustainability Reporting Directive and the SEC’s climate disclosure rules reshaping corporate reporting obligations.

As these pressures increase, forward-thinking boards are responding by integrating sustainability into core governance structures. High-performing companies tend to have boards with dedicated sustainability panels, mandate ESG literacy as a qualification, and incorporate climate considerations into enterprise risk-management frameworks.

Research shows that companies with strong ESG practices outperform financially, with top ESG performers posting annual shareholder returns 10 percent higher than bottom performers. This performance premium underscores that the role of sustainability governance extends beyond risk mitigation to creating strategic opportunities.

High-performing companies have boards with dedicated sustainability panels, mandate ESG literacy as a qualification, and incorporate climate considerations into enterprise risk management frameworks.

Majed Al-Qatari

This shift in perspective reveals sustainability as not just a defensive measure, but a driver of business growth.

Unilever’s board-level sustainability leadership, exemplified by its Corporate Responsibility Committee, oversees the company’s Sustainable Living Plan. This governance structure has helped Unilever reduce carbon emissions per unit of production by 56 percent, while maintaining consistent shareholder returns.

Similarly, Orsted, a Danish energy company, has seen its board-driven green transition cut carbon emissions by 87 percent and increase profits by 22 percent annually.

Given these examples, it is clear that sustainability must be viewed as more than just compliance; it must become an engine of innovation and competitive advantage. Companies with board-level sustainability oversight are approximately 2.7 times more likely to drive product innovation with environmental benefits than those without it.

Just as regulatory frameworks following accounting scandals in the early 2000s mandated financial expertise on boards, regulatory bodies should now require ESG competence. This shift is necessary to ensure boards are equipped to navigate the evolving business landscape.

Despite agreeing that financial capital remains the primary tool for meeting business objectives, companies lacking sound sustainability governance can face up to 30 percent higher costs than their more sustainable peers. This is a material financial impact that boards can no longer afford to ignore.

Ultimately, sustainability governance is essential for long-term value creation. In 2024, BlackRock CEO Larry Fink positioned climate risk as investment risk.

Boards that fail to lead on sustainability neglect their fiduciary duty to protect and enhance shareholder value in a rapidly evolving environment marked by environmental and social transformation.

Majed Al-Qatari is a sustainability leader and ecological engineer experienced in advancing environment, social, governance and sustainability goals.

 

 

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point of view

Kremlin expects Russia and Ukraine to discuss ceasefire conditions in Istanbul

Updated 44 sec ago

Kremlin expects Russia and Ukraine to discuss ceasefire conditions in Istanbul

Kremlin expects Russia and Ukraine to discuss ceasefire conditions in Istanbul
MOSCOW: The Kremlin expects Russia and Ukraine to discuss the list of conditions for a ceasefire in the war in Ukraine next week in Istanbul, its spokesman said on Friday, praising the US role in mediating the talks.
Russia has proposed holding the second round of talks with Ukraine in Istanbul on June 2. However, Ukraine wants to see Russia’s proposals for a peace deal before it sends a delegation to Turkiye, Foreign Minister Andrii Sybiha said on Friday.
Kremlin spokesman Dmitry Peskov said the Russian delegation would be traveling to Istanbul and would be ready for talks with Ukraine on Monday morning.
“At the moment, everyone is focused on the direct Russia-Ukraine negotiations. A list of conditions for a temporary truce is being developed,” Peskov told reporters. He said the details of the memorandum will not be published.
Reuters reported earlier this week that Putin’s conditions for ending the war in Ukraine include a demand that Western leaders pledge in writing to stop enlarging NATO eastwards.
US President Donald Trump’s envoy to Ukraine, Keith Kellogg, said earlier on Friday that Russia’s concern over the eastward enlargement of NATO was fair and the United States did not want to see Ukraine in the US-led military alliance.
Commenting on Kellogg’s statement, Peskov said that Putin has been consistently conveying Russia’s position on the inadmissibility of NATO’s eastward expansion.
“We are pleased that these explanations by the president are understood, including in Washington. And, of course, this is quite appealing to us in terms of the mediating role that Washington continues to play,” Peskov said.
Russia launched its full-scale invasion of Ukraine in February 2022 after eight years of fighting in eastern Ukraine between Russian-backed separatists and Ukrainian troops.

Mount Al-Fahlatain — where prophetic history meets pilgrimage tradition

Mount Al-Fahlatain — where prophetic history meets pilgrimage tradition
Updated 11 min 32 sec ago

Mount Al-Fahlatain — where prophetic history meets pilgrimage tradition

Mount Al-Fahlatain — where prophetic history meets pilgrimage tradition
  • The sacred site has been documented meticulously by historians and travelers
  • With an elevation of 1,084 meters, the mountain commands sweeping views across the surrounding plains

AlUla: Rising from the landscape north of Madinah, Mount Al-Fahlatain has served as a geographical beacon and spiritual waypoint for more than a thousand years.

The landmark, on the historic route to AlUla, bears witness to one of Islam’s most significant military expeditions — the Prophet Muhammad’s journey to Tabuk in 9 A.H.

The mountain’s name tells its own story. Two colossal rocks crown its summit, their silhouette resembling the horns of a bull — “fahl” in Arabic, giving rise to “Al-Fahlatain,” or “the two bulls.”

The sacred site has been documented meticulously by historians and travelers.

Ali Al-Samhudi’s work, “Wafa Al-Wafa Bi Akhbar Dar Al-Mustafa,” places the location precisely one day’s march from Madinah, describing twin peaks sheltering underlying rock formations. Firuzabadi reinforced its historical significance in “Al-Maghanim Al-Mutaba fi Ma’alim Taba,” cataloging it among the landmarks witnessed by the Prophet’s army on their way to Tabuk.

Mohammed Ibn Abdullah Al-Mawlawi provided additional detail in “Rihlat Al-Shita Wa Al-Sayf,” positioning the twin peaks on the mountain’s western flank alongside the main thoroughfare. Al-Suwaidi offered an alternative etymology in “Al-Nafha Al-Miskiyya Fi Al-Rihla Al-Makkiyya,” suggesting the name reflects the mountain’s solitary stance in the landscape, isolated like a bull among grazing camels.

Historian and Islamic history researcher Fouad Al-Maghamsi identifies Mount Al-Fahlatain — sometimes called Faifa Al-Fahlatain — as strategically positioned near Shajwa village, northwest of Madinah.

With an elevation of 1,084 meters, the mountain commands sweeping views across the surrounding plains, bordered by complementary ridges and highlands.

Al-Maghamsi said the site functioned as a vital rest station along the Syrian Hajj route, known as Darb Al-Hajj Al-Shami, earning local appellations including “Antar’s Fortress” and “Antar’s Stable.”

Archaeological evidence such as building foundations and service facilities suggests a sophisticated infrastructure designed to support the thousands of pilgrims and merchants who annually traversed these routes.

The Syrian Hajj route encompasses diverse terrain rich with sites linked to prophetic biography and pilgrimage heritage.


Real Madrid sign Alexander-Arnold from Liverpool

Real Madrid sign Alexander-Arnold from Liverpool
Updated 21 min 54 sec ago

Real Madrid sign Alexander-Arnold from Liverpool

Real Madrid sign Alexander-Arnold from Liverpool
  • Real Madrid have signed defender Trent Alexander-Arnold from Liverpool on a deal until 2031, the Spanish giants said on Friday

MADRID: Real Madrid have signed defender Trent Alexander-Arnold from Liverpool on a deal until 2031, the Spanish giants said on Friday.
The 26-year-old England international’s contract at Anfield was drawing to an end but Madrid paid a fee to bring him in earlier so he can play in the Club World Cup.
Right-back Alexander-Arnold, who has just won the Premier League title with Liverpool, came through the academy of his boyhood club and won the Champions League in 2019.
He also won the Premier League in 2020 and 352 appearances for the club.
The defender joins former Liverpool midfielder Xabi Alonso at Real Madrid, with the Spaniard appointed as their new coach to replace Carlo Ancelotti.
Alexander-Arnold’s close connections to Liverpool meant that his announcement that he was leaving the club was viewed with disgust by some supporters and he was booed in the penultimate match of the season.
But after club figures including former manager Jurgen Klopp and Mohamed Salah urged fans to remember the contribution he has made to Liverpool’s success over the last six years, he was roundly cheered when he lifted the Premier League trophy at Anfield last Sunday.
The defender joins a Real Madrid side which failed to win a major trophy this season.
Alexander-Arnold has been criticized for his defensive concentration at times but brings supreme passing vision and attacking edge down the right flank.
Real Madrid have struggled at right-back this season with Dani Carvajal recovering from a long-term knee injury and winger Lucas Vazquez enduring a torrid time there out of position.
Alexander-Arnold could make his Real Madrid debut when they face ֱn side Al-Hilal in their opening Club World Cup match on June 18 in Miami.
Real Madrid have also signed Spanish center-back Dean Huijsen from Bournemouth as they look to bolster a back-line which was ravaged by injury this season.


Pakistan criminalizes child marriages in Islamabad despite opposition from Council of Islamic Ideology

Pakistan criminalizes child marriages in Islamabad despite opposition from Council of Islamic Ideology
Updated 43 min 30 sec ago

Pakistan criminalizes child marriages in Islamabad despite opposition from Council of Islamic Ideology

Pakistan criminalizes child marriages in Islamabad despite opposition from Council of Islamic Ideology
  • Under the new law, the minimum age for marriage is set at 18 for both men and women in the federal capital
  • Prison terms of up to seven years have been introduced for those who facilitate or coerce children into early marriages

ISLAMABAD: Pakistani President Asif Ali Zardari on Friday signed into law a bill criminalizing child marriages in the federal capital of Islamabad, despite opposition from a constitutional body that advises the Pakistani government on the compatibility of laws with Islam.

The law criminalizes underage marriages and introduces strict penalties of up to seven years in prison for family members, clerics and marriage registrars who facilitate or coerce children into early marriages. Any sexual relations within a marriage involving a minor, regardless of consent, will be considered statutory rape, according to the law. An adult man who marries a girl under the legal age could face up to three years in prison.

Pakistan’s National Assembly had unanimously passed the Islamabad Capital Territory Child Marriage Restraint Bill tabled by Pakistan Peoples Party’s (PPP) Sharmila Faruqui on May 16. Under the new law, the minimum legal age for marriage for both men and women in Islamabad is 18. Previously, it was 16 for girls and 18 for boys.

However, the Council of Islamic Ideology this week declared the said bill “un-Islamic,” saying that clauses of the bill, such as fixing the age limit for marriage and declaring marriage below the age of 18 as child abuse and punishable, did not conform with Islamic injunctions.

“The Islamabad Capital Territory Child Marriage Restraint Bill, 2025 is assented to, as passed by the Parliament,” President Zardari was quoted as saying in a notification issued from his office.

In Pakistan, 29 percent of girls are married by the age of 18 and 4 percent marry before the age of 15, according to Girls Not Brides, a global coalition working to end child marriage. In comparison, five percent of boys marry before 18.

PPP Senator Sherry Rehman thanked the president for signing the bill into law “despite all pressure.”

“Proud moment for Pakistan,” she said on X. “Thank you to all the women and men who made this possible after a long journey of twists and turns.”

Pakistan ranks among the top 10 countries globally with the highest absolute number of women who were married or in a union before turning 18.

Girls who marry young are less likely to complete their education and are more vulnerable to domestic violence, abuse and serious health complications.

Pregnancy poses significantly higher risks for child brides, increasing the chances of obstetric fistulas, sexually transmitted infections and even maternal death. Teenagers are far more likely to die from childbirth-related complications than women in their twenties.


Egypt denies court ruling threatens historic monastery

Egypt denies court ruling threatens historic monastery
Updated 54 min 45 sec ago

Egypt denies court ruling threatens historic monastery

Egypt denies court ruling threatens historic monastery
  • A court in Sinai ruled on that the monastery ‘is entitled to use’ the land, which ‘the state owns as public property’
  • Archbishop Ieronymos of Athens called the court ruling ‘scandalous’

CAIRO: Egypt has denied that a controversial court ruling over Sinai’s Saint Catherine monastery threatens the UNESCO world heritage landmark, after Greek and church authorities warned of the sacred site’s status.

A court in Sinai ruled on Wednesday in a land dispute between the monastery and the South Sinai governorate that the monastery “is entitled to use” the land, which “the state owns as public property.”

President Abdel Fattah El-Sisi’s office defended the ruling Thursday, saying it “consolidates” the site’s “unique and sacred religious status,” after the head of the Greek Orthodox church in Greece denounced it.

Archbishop Ieronymos of Athens called the court ruling “scandalous” and an infringement by Egyptian judicial authorities of religious freedoms.

He said the decision means “the oldest Orthodox Christian monument in the world, the Holy Monastery of Saint Catherine in Mount Sinai, now enters a period of severe trial — one that evokes much darker times in history.”

El-Sisi’s office in a statement said it “reiterates its full commitment to preserving the unique and sacred religious status of Saint Catherine’s monastery and preventing its violation.”

The monastery was established in the sixth century at the biblical site of the burning bush in the southern mountains of the Sinai peninsula, and is the world’s oldest continually inhabited Christian monastery.

The Saint Catherine area, which includes the eponymous town and a nature reserve, is undergoing mass development under a controversial government megaproject aimed at bringing in mass tourism.

Observers say the project has harmed the reserve’s ecosystem and threatened both the monastery and the local community.

Archbishop Ieronymos warned that the monastery’s property would now be “seized and confiscated,” despite “recent pledges to the contrary by the Egyptian President to the Greek Prime Minister.”

Greek Foreign Minister Giorgos Gerapetritis contacted his Egyptian counterpart Badr Abdelatty on Thursday, saying “there was no room for deviation from the agreements between the two parties,” the ministry’s spokesperson said.

In a statement to Egypt’s state news agency, the foreign ministry in Cairo later said rumors of confiscation were “unfounded,” and that the ruling “does not infringe at all” on the monastery’s sites or its religious and spiritual significance.

Greek government spokesman Pavlos Marinakis said “Greece will express its official position ... when the official and complete content of the court decision is known and evaluated.”

He confirmed both countries’ commitment to “maintaining the Greek Orthodox religious character of the monastery.”