Key Takeaways: Navigating ESG and Climate Headwinds: Strategic Narratives for Financial Sector Boards

Following the discussion, Chapter Zero, together with the Climate Governance Initiative, developed a guide for financial services non-executive directors (NEDs) who want to sharpen and communicate their strategic, business-focused approach to climate and ESG.

Key Takeaways

Embedding climate and nature into business strategy is a prudent risk management imperative and shock resilience opportunity. But to make that case, boards and their leadership teams need a strong, individually tailored, business-focused narrative.

Narratives do not emerge on their own. They need to be developed and agreed. It can help to use a simple framework to form and structure a robust narrative, focusing on the following elements:

1. Common Cause
   Articulate shared values and interests across diverse stakeholders. E.g. align climate strategy with long-term prosperity, competitiveness, and national interest.
2. The Problem
   Be specific and honest about the problems the company is currently facing, including the risks of inaction—from stranded assets to regulatory breaches to social instability. Remember why you set out on this path in the first place—you identified a business need based on evidence, go back to that original need, re-examine it in the current context, and build from there.
3. The Solution
   Outline positive, concrete, and realistic visions of success. You might focus on resilient business models, trusted brands, and future-fit talent. To do justice to this element, the board will need to engage in some foresight activities and agree a future destination that resonates with the organisation’s goals and strategic direction.
4. The Call to Action
   Create clarity around what comes next, offering ideas and pathways—whether it’s enhancing disclosures, refreshing the strategy, or creating new products or partnerships.
5. Action
   Incorporate time-frame details, including how action can or must sustain into the future. Extend the core narrative to demonstrate how it holds firm over that time-frame.