Women General Counsels Steering Energy-Transition Compliance from Within the Boardroom

NACD Northern California welcomed our Women General Counsel (GC) Cohort for an insightful virtual program focusing on their critical role in steering organizations toward a more sustainable future.

From setting ambitious sustainability goals to navigating complex regulatory landscapes and making strategic investment decisions, this group is at the forefront of driving meaningful change and guiding organizations to show impact in this crucial area affecting all industries. We were delighted to welcome Marie Oh Huber, Julie Mayo, and Katie Rowen to lead this discussion.

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Key Takeaways

Role of the GC—As the lawyer in the room, GCs have a unique position to address the regulatory landscape surrounding sustainability for their organization—it can come with distinct challenges and opportunities for educating the board on these critical issues.Perceived Tensions—Sometimes, there can be a perceived tension between creating shareholder value and achieving climate goals. Although there are always hard choices to be made in allocating scarce capital and resources, but creating shareholder value and climate goals don't need to be mutually exclusive. Aligning the board and other stakeholders to the sustainability issues should integrate the following:

• Ruthless Prioritization: Identify and prioritize opportunities arising from the energy transition that can be absorbed by the business, focusing only on projects aligned with the company's core strategy.
• Pragmatic Goal Setting: Ensure your goals are attainable and aligned to the strategy. The board should be there for pressure testing these goals and asking the right questions to ensure they are grounded in stakeholder value, buy-in and data fidelity, for example.
• Intentional Implementation: Demonstrate to the board that compliance and leadership in sustainability can be achieved without sacrificing shareholder value by maintaining well-informed discussions with data-backed results.

Goal Setting—You should be able to justify how goals have been set, so if you need to recalibrate the goals, you can easily help stakeholders (shareholders, customers, employees, surrounding communities) understand why and reset the goals easily based on new assumptions or regulations affecting them. Being thoughtful in the goal setting, pragmatic in goal evaluation, and transparent in the goal readjustment is critical. Be rigorous in reviewing the reporting and the consistency of the reporting.

Navigating Board Dynamics—GCs can act as the lead on board education on this topic, and help foster an environment that encourages intellectual curiosity and allows for important questioning, helping the board understand the geopolitical and regulatory landscape's implications on business strategy. Field trips can be a great source of connecting with the board on key issues and getting their buy-in on sustainability needs. Although leadership should drive the goal setting, the board needs to be well-educated on this topic to provide good oversight and help mitigate any risks.

Committee Structures—There isn't a one-size-fits-all, however, the majority of companies put sustainability goals under Nom/Gov to begin with, with the Audit Committee also overseeing and facilitating discussions around financial commitments, risks and disclosures. You should relook at the board's skills annually to see whose skills are relevant to the latest needs on this topic as they evolve quickly.

Managing Reputation—The GC or Chief Legal Officer should ensure the board and management are considering reputation management, particularly when setting goals and ensuring these are going to be achieved.

Key Questions for the Boardroom

• How do our sustainability goals align with our overall business strategy, and are they realistic?
• Do we have high-quality data to support our sustainability goals, and how frequently are we assessing this data?
• How are we preparing for potential backlash or challenges in meeting our sustainability goals?
• What feedback are we receiving from stakeholders regarding our sustainability efforts, and how are we incorporating this into our strategy?
• How can we foster a culture of questioning and learning around sustainability within the boardroom?
• How are each of our board committees integrating sustainability into our work and are we appropriately engaging the management team and outside experts?
• Has the management team identified and quantified the risk that climate change poses to our business and what are our plans to address it?

Thank you to our partner and moderator, Catherine Zinn at Baker Botts, for generously hosting this event and being an ongoing supporter of NACD Northern California’s Women’s GC Cohort.