The Better Boards Podcast Series: A Balancing Act – Where Should EMEIA Boards Focus for Long-term Success?

The Better Boards Podcast

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Managing an ever-growing agenda, boards today face a plethora of issues that can pull their focus in countless directions. It’s a careful act of juggling responsibilities and steering through a tide of economic, technological, and regulatory challenges while holding onto the guiding star of long-term success. How can boards maintain clarity and focus amidst their expanding scope of responsibilities, especially when it comes to the critical area of sustainability?

In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner, discusses this issue with Andrew Hobbs from EY’s Center for Board Matters, where he has spent over 20 years in various roles. Most recently, he took on leadership for the EY Center for Board Matters across Europe, the Middle East, India and Africa (EMEIA) while continuing to serve in his role as EMEIA Public Policy leader, where he meets boards and audit committees of companies of all sizes, discussing regulatory change and corporate governance. He is Chair of the Corporate Governance Working Group of the European Contact Group, Vice-Chair of the Corporate Governance Policy Group of Accountancy Europe, and the author of the annual EY EMEIA Board Priorities report.

“I can confidently say GenAI is redefining business efficiencies and innovation”

Andrew thinks boards need to infuse their organisations with the right tech skills and foster a culture that’s eager to leverage AI’s full potential. Turning AI chatter into meaningful outcomes is challenging. Veryfing GenAI tools are applied within the right contexts and properly integrated with existing systems is key to adding actual value.

Ensuring responsible AI integration is not just a priority; it’s a necessity. As GenAI advances, the threat landscape evolves, particularly around sophisticated cyberattacks. Boards need to proactively address these risks, making them a part of the agenda, to stay ahead of potential pitfalls. This responsible approach to AI integration will reassure stakeholders about the ethical considerations and the commitment to long-term success.

Of course, this must be done in the evolving regulatory landscape. Andrew believes that the boards need to keep an eye on imminent regulations, such as the AI Act in the EU. Companies rely on their boards to help them prepare for and adapt to new legal standards governing AI usage. So, boards should navigate these areas strategically, yet cautiously, enabling GenAI to drive innovation securely and ethically.

“Boards have been spending more time on workforce-related topics for the last couple of years than they have in a long time, and they don’t expect that to change anytime soon”

Andrew hears fresh urgency about human capital, skill gaps, and the employee value proposition in his conversations with boards. The present situation with AI, DEI, and the global economic climate means boards are under renewed pressure to provide governance and guidance.

To Andrew, boards must be proactive in facing the skills shortage while still emphasising DEI. This means boards must work with management to robustly map out the organisation’s skills inventory against future requirements, pinpointing gaps, especially in regions or functions most affected by skill gaps.

A clear strategy for developing future leaders is critical, but detailed data on recruitment, turnover, and insights from exit interviews must support it. Andrew feels boards can use these to strengthen the employer brand, and understanding why talent leaves is critical to enhancing retention strategies.

Lastly, boards should ensure that the hybrid working models support DEI objectives and help the company remain competitive. This takes on added significance as companies compete for a limited pool of diverse talents. Boards need to help management see how to express the employee value proposition best and must challenge management on plans for reskilling or upskilling existing staff versus bringing in outside talent or new tech tools. This ensures company strategies align with current business goals, DEI principles, and future business plans.

“The ability to predict the future is not as good as it used to be, or at least that’s the perception”

While boards are used to managing risks for their organisations, Andrew thinks there is more to manage – and more in flux – than in the recent past. As a result, he recommends boards lean more heavily on scenario planning and increase their monitoring of disparate world events. In this way, boards can help chart a strategic and flexible course.

It is a bigger ask than in the past. Andrew believes the modern Non-Executive Director needs to be high-level conversant about more topics these days to challenge and tire-kick scenarios management prepares for. Boards also need to be aware of their own knowledge gaps and open to bringing in outside expertise to supplement and advise as needed.

“Make sure you don’t have all your eggs in one basket”

Risk assessments, skills gap analysis, scenario planning… to Andrew, it’s about boards making sure their companies have the agility and resilience to withstand economic or geopolitical shocks. He believes boards should elevate supply chain strategy to reinforce agility and resilience by embracing technology—such as AI and automation—that refines supply chain performance and drives cost efficiency.

Andrew also feels investing in the circular economy and adapting to consumer expectations is essential for supporting sustainability and aligning with regulatory demands. To him, supply chains are more than logistics pathways. They are competitive advantages that can withstand global shifts and digital transformations. Boards can direct this shift, positioning companies to thrive in a rapidly changing economic landscape.

“The problem some companies have is a lack of confidence in the likely return on investment of allocating capital towards sustainable sources”

To Andrew, transitioning to a low-carbon economy is non-negotiable, with significant net-zero commitments from nations and corporations. Despite the inclination to prioritise short-term earnings, boards must confidently champion sustainability as a value-creating strategy, not a cost centre. The EY Sustainable Value Study reveals that proactive climate action correlates with increased financial and societal returns.

Thus, sustainability must be ingrained in the company’s accountability systems, with rigorous financial planning, transparent reporting, and a governance framework attuned to achieving these ambitious targets. In this balance between ambition and pragmatism, boards should ensure that management’s steps are bold and confident toward a sustainable future and be more demanding of management to do the work that counts. 

The three top takeaways for effective boards from our conversation are:

  1. Boards should recognise the power of generative AI in driving innovation and improving efficiencies within their organisations. However, it is equally essential to establish robust governance around its use. This includes fostering an AI-literate culture, ensuring ethical AI deployment, managing potential biases and cybersecurity threats, and maintaining compliance with evolving regulations. By balancing growth opportunities with proper governance, you can responsibly leverage AI’s transformative potential.
  2. Human capital, especially concerning DEI, is a critical strategic priority for boards. As technological advancements, such as AI, reshape the workforce, boards must advocate for policies and practices that maintain a balanced, fair, and diverse corporate environment.
  3. Board members must act as catalysts for embedding long-term sustainability into their company’s DNA. This involves guiding management to adopt sustainable practices, pushing for innovative approaches to achieving net-zero targets, and responsibly reporting environmental efforts to stakeholders. Furthermore, resilience should be at the forefront of strategic planning, particularly in reconfiguring supply chains, to mitigate risks associated with global disruptions and support broader sustainability goals.

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