Our last article, ‘Learning about directorships’ looked at some of the areas of training that might benefit company directors. In that article we touched on understanding obligations, planning and risk management, communication and consultation. These are all fairly standard requirements, not only for board members but also for those who aspire to take up positions of leadership in the future.

Now a new report from the Institute of Directors (IoD) has highlighted another topic which increasingly has become part of the business landscape. That topic is political awareness. The report, ‘Are Boards Losing Control’ focuses on the very real danger that boardroom control is being whittled away thanks to the impact of outside forces on business.

Whilst commenting that the prime duty of a director is to act in the interests of the company, the IoD report comments that the complex network of relationships between companies, investors, regulators and the wider constituency can blur the lines of responsibility. Citing one area in particular, ESG (Environmental, Social, and Corporate Governance) expectations can encompass a range of topics from the organisation’s impact on the environment to equality and integration issues. Leaders need to be confident that they have the skills and abilities to cut through to the heart of issues and apply policies which are in the best interests of the organisation.

That is why the IoD recommends that “boards should consider adding political awareness to their skills profile.” More than that, the IoD adds that leaders should be willing to take an active role in public debate in order to ensure that areas of debate and their impacts on business are better understood.

Whilst some organisations have embraced ESG issues as a key element of strategy and policy, an FRC survey revealed that others still see it more in terms of a tick box exercise. There is a danger that doing so could open up the organisation to unanticipated risks. On the other side of the coin, regulators need to ensure that the ESG debate doesn’t lead them to impose processes which might not be in the best long term interests of the company.

Political awareness may not come easily to board leaders who are more accustomed to thinking in terms of statistics, sales, or the bottom line. Nevertheless, with companies increasingly being seen not simply as providers of goods and services but also as contributors to the wider society it is an area which has moved up the boardroom agenda in recent years. Taking time out to provide current and future leaders with the skills that they need could help their company to thrive in today’s more complex world.