It’s time for boards to get serious about impact
Corporate boards are facing the most complex context in decades. Navigating a way through requires serious and significant engagement with social and environmental impact
‘Does your board have the right game plan for a decade with no second lives?’ asked Company Director Magazine in February 2026.
Most of us don’t remember a time when the strategic context was so complex.
Past eras of industrial and technological revolution, structural disruption, geopolitical and financial instability, war and marked inequality, didn’t face the compounding systemic challenge of climate change.
The Intergovernmental Panel on Climate Change says we must halve global emissions or set ourselves and coming generations up for a future where it becomes impossible to adapt. That includes business.
The patterns of intense heatwaves followed by wildfires and floods, exacerbated by our changing climate, is already dramatically affecting livelihoods across the globe and threatens insurability in many regions.
PwC’s 28th Annual Global CEO Survey found 45% of chief executive officers do not believe their company will be viable in a decade, based on their current trajectory.
The stakes are high.
Robust governance fit for 21st century conditions is critical. Now is not the time for inertia or a return to credos of profit at any cost. The smart money will build and strengthen dynamic, impact-informed governance as part of a board’s fitness to respond.
Many boards are engaging actively and are reviewing their strategies. However, fear of public backlash, mounting compliance, increasingly inconsistent regulation and imperfect data creates a veritable minefield in unfamiliar territory.
How boards approach their role and all its challenges now, matters. The reflex to pick up familiar tools is understandable, but many of those tools are no longer fit for purpose. A fundamental rethink is needed.
The good news is that boards can still look to key questions that define their roles and duties: What is the purpose of the corporation? What interests and consequences do we need to focus on? And what are the appropriate time horizons to optimise performance and meet market expectations?
In the 2023 Harold Ford Memorial Lecture, High Court Justice, Michelle Gordon AC, pointed out that it is the answer to these core questions that have changed over time:
“…new and different answers may be emerging as increasing emphasis is given to how companies are governed and to the responses companies can or should have to ESG issues. And if new and different answers are emerging, it is because the kinds of interests and consequences which directors should consider are seen as wider than they once were.”
In the past couple of years in global roundtables, directors have grappled with these questions in more concrete and targeted ways. They are often more conscious of the gap between commitment and action, and the need to link risks and opportunities of the changing environment to strategic choices and directions.
Organisations that focus on their purpose are more likely to deliver meaningful impact. They are also more likely to successfully navigate a rapidly-changing strategic and operating environment of scarce resources, increased scrutiny and systemic shocks.
Leading economists including Professor Michael Porter and Nobel Laureate, Joseph Stiglitz, believe we have overlooked the major insights of modern economics – that societal and economic factors have been misaligned. Indeed, that profit at the expense of people and the planet is self-defeating.
Links between governance and the social and environmental impacts of a company hold the key. With social and environmental conditions defining much of the strategic context, the requirement now is to integrate those considerations into how decisions are made.
Boards with impact at the heart of their decision-making gain additional insight into risks and opportunities. A wider aperture becomes an actionable, useful means of navigation.
When decision-makers double down on understanding the impacts of environmental and social factors, this can open up innovation through products, services, processes, alliances, business models and potential for value creation.
What if we moved away from assumptions of a necessary trade-off between profit and purpose to open new frontiers of productivity and innovation?
Experience sitting at board tables and engaging with global colleagues suggests boards that place purpose and impact at the heart of their organisations and strategies are better equipped to navigate a transparent and confident path through uncertainty.
But organisations that separate their social, environmental and financial performance will miss vital signals, risks, imperatives and opportunities.
The imperative for good governance is not going away. It’s getting stronger and calling for something different. Boards need to understand the full picture of their strategic choices.
The most powerful thing that boards can do is get started – bring impact into focus across the agenda and get increasingly clear about purpose. It informs their key decision-making role, helps them ask different and better questions, and helps them understand the choices and trade-offs for their organisation in a more holistic and nuanced way.
Professional development offered through Melbourne Professional Education (MPE) at the University of Melbourne can help leaders build their muscle, seize the value creation opportunities to differentiate, build resilience to the inevitable shocks coming our way, drive stronger performance and be fit for the future.
Professor Rosemary Addis AM, Founding Managing Partner, Modiale Impact; Enterprise Professor, Impact, Innovation & Investment, Faculty of Business and Economics, University of Melbourne.