Board sustainability experience grows amid investor demand

Female board members more likely to have sustainability experience

Sustainability experience at board level has jumped in the last six months, research by EY has found, as companies respond to investor demand for the knowledge among senior leadership.

Just under a third (32%) of companies currently have board directors with professional experience or expertise in sustainability, the latest EY Boardroom Monitor found.

While still low, this is a significant rise since the inaugural EY Boardroom Monitor in June 2022, when just 19% of boards monitored listed sustainability expertise.

Hiring more leaders with sustainability experience comes as the majority of investors were found in the EY research to consider that a dealbreaker for investing

More than half (51%) of investors said boardroom experience in sustainability has a ‘significant’ impact in terms of making a company an attractive investment.

A fifth (22%) went further, and said it has a ‘highly significant’ impact on a company’s investment case.

Female board members lead

Other findings from the EY research suggested sustainability experience is much more prevalent among female board members.

While the current gender split across financial services boardrooms stands at 58% male and 42% female, an outsized proportion of 72% of board directors with experience in sustainability are female.

Financial services offers a mixed picture in the race to increase sustainability expertise.

Wealth and asset management firms and insurers continue to lag the banking sector in appointing leaders with sustainability experience, but the direction of travel is the same and change is happening fast.

Forty-three per cent of bank boards (up from 34% in June) include individuals with sustainability backgrounds.

Boardroom sustainability experience within Europe’s financial services boardrooms by sectors

Boardroom sustainability experience within Europe's financial services boardrooms by sectors

This compared to 32% of wealth and asset managers (up from 11% in June), and just 17% of insurers (up from 4% in June). 

Appointment acceleration

EY analysis found 65% of directors with sustainability experience have been appointed to their position in the last three years alone, up from 45% in June, pointing to an acceleration in the growth of this skill set. 

Almost half (46%) of board directors with experience in sustainability have been appointed within the last year. Of all board directors, 13% have been appointed within the last year, 15% of whom bring sustainability expertise.

Omar Ali, EY EMEIA financial services managing partner, said: “From a governance and risk management perspective, to manage the transition and to attract essential investment, having a deep understanding of the materiality of climate risks and opportunities is seen by investors as a competitive advantage. 

“Climate change presents both a systemic risk and significant opportunity for financial services, and we expect boards to continue to build this expertise at this accelerated pace. Achieving net zero is impossible without financial services – a key message coming out of COP27.”