Seizing the new economy: A premium on board judgement and courage

Last week's Chapter Zero flagship event, Boards, Climate and Pathways to the New Economy, brought together more than 300 board members and senior business leaders, including FTSE 350 Chairs and non-executive directors, to explore a pressing question: what will it take to accelerate the transition to a more resilient, secure and prosperous economy?

Against a backdrop of geopolitical uncertainty, economic pressure and competing board priorities, speakers delivered a consistent message. The transition is already underway. The technologies exist. The economics are increasingly compelling; the harder task is overcoming what Rachel Kyte called the “twin evils” of incumbency and inertia across markets, institutions and decision-making.

As Chapter Zero CEO Vicky Moffatt observed, the context boards are navigating is constantly evolving. Board judgement and the quality of conversation around the table have therefore never been more important.

"Boardroom judgement capability has never been more important. This is what the Chapter Zero community is about. Nothing more, nothing less. What we have here today, and in our wider community here and around the world, is a golden thread across the economies. A golden thread of directors on the boards of corporations in industry, in civil society, working for arms-length bodies and governments. Just our FTSE 350 financial services NEDs alone are governing over 5 trillion of assets under management. We ought to be able to have an impact together."

The transition challenge is increasingly a systems challenge

A recurring theme throughout the evening was that every participant in the system is behaving rationally within the incentives, constraints and time horizons they face.

John Flint and Nigel Topping argued that the system does not yet enable change at the pace required: political cycles, capital markets, reporting rhythms and executive incentives favour short-term outcomes even as longer-term risks become more material.

This matters because, as several speakers noted, we are entering a period characterised by non-linear risks and tipping points. Boards must identify weak signals, challenge assumptions and prevent immediate operational priorities from crowding out emerging risks and opportunities.

At the same time, there was a strong sense of optimism around technological progress. Lord Adair Turner highlighted that the extraordinary advances in solar, batteries and electrification mean lower emissions and lower costs are increasingly moving in the same direction. The question is whether institutions can adapt quickly enough to capture that opportunity.

"The good news alongside the gloom is that there are a set of technologies related in particular to electricity generation and use which are falling in price and improving in performance far faster than we dared think possible just 10 or 15 years ago."

The challenge, therefore, is not whether the transition is possible. It is whether institutions can adapt quickly enough to avoid the planet entering the zone of non-linear tipping points, ecosystem collapse and acute national security risk and, in doing so, capture the economic opportunity of the 21st century.

John Flint commented “And it's absolutely time to try and … find out what your shareholders actually want. When I say the shareholders, … I mean the individuals, the citizens. We can't say today that we don't have the technology to solve this problem. There's no excuses. The only excuse is a lack of energy for this. I think if we can improve that connection [between boards and individual/citizen shareholders], boards and executives will get permission quickly to make the shift that I suspect everybody in this room wants.”

Moving beyond risk to opportunity

Climate has traditionally entered the boardroom through risk registers, compliance requirements and disclosure frameworks. These remain important, but several speakers argued that boards may overlook the larger strategic opportunity if the discussion stops at risk oversight. John Flint also posed a more pointed challenge: could environmental crime develop the same legal, regulatory and reputational force that financial crime acquired over recent decades? Boards should consider the trajectory now, rather than waiting for enforcement expectations to harden.

As Jo Harlow noted during the panel discussion, climate, AI, geopolitical instability, supply chains and shareholder returns cannot be treated as separate conversations. Boards do not have the luxury of choosing between competing priorities. The challenge is to navigate the “and” by considering these issues together as part of a coherent strategic response.

Similarly, Fumbi Chima argued that sustainability must become embedded in organisational DNA rather than being treated as a standalone agenda item. When considering reductions in targets, investment programmes or strategic ambition, boards should deliberately ask: what is the long-term cost of us doing this?

Her comments included that “It just has to be in the DNA, in the fibre and a standard agenda on every board. Three years ago, very few boards talked about the word AI… and now every day, you can't go past anything either on the TV or news or even your phone that doesn't have any AI impact. So, now we've been forced to make it a board agenda. This has to be a board agenda…and the way in which we have to narrate the conversation is that it's not ‘Oh well it's the environment.’ It's, what's the impact of this decision? What is the business impact to us? … [It’s] for us as a board members … [to] make sure that we're really having that conversation holistically versus ‘I'm building this as a KPI that I just have to deal with’.”

The human dimension is becoming impossible to ignore

A session on climate, human capital and health explored an issue central to WTW’s work.

Drawing on Wellcome's work in this area, Richard Gillingwater highlighted how climate impacts are increasingly translating into tangible business consequences, including operational disruption, changes in workforce productivity, increased absenteeism, health-related risks and potential challenges in accessing capital and insurance.

Extreme heat, worsening air quality and the spread of vector-borne diseases may once have felt remote for many organisations. Increasingly, they represent issues that boards need to understand through a business lens as well as a societal one.

For directors, this reinforces the importance of broadening discussions beyond emissions reduction alone and highlights a clear interdependence between climate, human capital and business continuity. Adaptation and resilience received notable attention throughout the evening, reflecting growing recognition that organisations must prepare for the consequences of climate change alongside efforts to mitigate it.

Alan Dangour commented that “We've seen this summer already the impacts of extreme heat in the UK and Europe and many countries around the world. More fires, more heat, more drought. It's the human impacts. It's the impacts on our health. And that's why it's so important that we engage the private sector and the business community in the impacts of climate change affecting workforces, affecting supply chains, affecting our ability to conduct business and drive those important economic outcomes.”

Which appears alongside Magali Anderson's view that “… It's about people's lives, families destroyed, reputational risks, operational disturbance. Good health and safety [also] means lean operations. So, it's actually good for business. And that's why it's a board matter.”

Both quotes are from ‘the climate and health nexus’ film made by Chapter Zero in partnership with Wellcome Trust; launched at the event by Richard Gillingwater CBE, Senior Independent Director, Spirax Group plc and Whitbread plc; Board of Governors, The Wellcome Trust; Supporting Chair, Chapter Zero

What should boards do differently?

Several speakers stressed the need for boards to bring greater curiosity, challenge and long-term thinking to strategic discussions. Three actions stood out.

First, deepen understanding of the technologies reshaping your sector.

Nigel Topping urged boards to understand the technology cost curves affecting their industries, competitors and customers and how those technologies interact. He shared “My question is how well do you as a as a board understand the technology cost curves of your technology of your competitor's technology and in your supply chain?”

Second, challenge short-termism.

Boards play a critical role in stewarding long-term value creation. Multiple speakers warned that boards can sometimes become drawn into executive time horizons, losing sight of longer-term trends and systemic risks. Effective challenge means asking which signals are being missed, which assumptions need revisiting and whether today’s decisions remain robust under different future scenarios.

Third, focus on enabling investment rather than simply overseeing targets.

As David Blood observed, the roadmap to the new economy is shaped through capital allocation, not “finger wagging”. Boards should test whether transition plans are credible, investable and supported by the resources required for delivery. He also spoke to the importance of exercising fiduciary duty intentionally when making capital allocation decisions, considering the consequences and when to act independently and when to collaborate.

David shared that “For me, this is a systems challenge. It requires all of us, but it requires all of us to be acting independently also. There are things we can do and must do and should do because it's a really good investment idea. By the way, it's also a very good fiduciary thing to do if we're not going to leave our children or our beneficiaries a 3C warmer world. A world where we've degraded ecosystems and we have significant inequality. That is not a good retirement. So, we really have to think carefully about what it is that we're doing here in terms of allocating capital and building businesses.”

Priorities for NEDs over the next 12 months

Looking ahead, four priorities emerge for NEDs and Chairs.

Rachel Kyte added “You have to speak out really strongly to government about the investment environment that you need in order to make the big bets that you need to make. I think the stronger that that voice comes through the more governments are listening.”

Board judgement, courage and leadership

The evening concluded with a clear leadership test. Transition plans provide essential direction and accountability, but progress depends on boards using judgement, imagination and courage when the path is uncertain. As agendas become crowded and short-term pressures intensify, effective NEDs must keep asking what is changing, what is being missed and how today’s decisions can create long-term value.

The future will favour organisations whose boards can connect climate to the full strategic agenda, sustain robust debate and help turn ambition into investable, executable change.