I wrote here recently that boards of directors face a growing challenge in monitoring the expanding social responsibilities of business. Climate tops the list, and the SEC’s recent landmark proposal on corporate climate disclosures underscores the size of the challenge.

How are boards responding? That was the subject of a roundtable discussion Fortune held yesterday, with both directors and chief sustainability officers of major companies. One clear takeaway for me was that sustainability is no longer being treated as a side conversation and is not being handled by separate committees. Instead, it is increasingly core to company strategies. Here’s Joe Jimenez, former CEO of Novartis:

“On the two big boards that I sit on—GM and Procter & Gamble—ESG goals are fully integrated into the business plans of those companies. For example, at General Motors, the company has made the commitment to only sell electric vehicles by 2035, and that is a massive commitment with massive climate implications. So the board is already monitoring and managing the pivot from internal combustion engines toward EVs over a very short period of time.”

I asked Charles Phillips, former CEO of Infor and a director of ViacomCBS and American Express, whether he was concerned that adding climate and other ESG goals to the performance metrics of CEOs would distract them from their profit-making focus. His response:

“I guess that train has kind of left the station…We’re not having that debate (about whether it’s a good idea) anymore. Instead, it’s how are we going to deal with this going forward, because more is coming.”

Lisa Edwards, president of Diligent, which was Fortune’s partner in yesterday’s meeting, told the assembled directors that shareholder proposals related to ESG “are up 22% in the first quarter”—putting additional pressure on boards to get serious on climate.

Much of the discussion yesterday centered on so-called Scope 3 emissions—those caused by a company’s suppliers and customers. That’s the most difficult part for companies to measure and monitor. But Virginie Helias, chief sustainability officer of P&G, said it is also the most important. “For P&G, consumer use is over 80% of our emissions, and it’s basically the heated water you use when you shave, or when you wash your hands, your clothes, your dishes.” She said the company has made it a high priority to innovate so products require less hot water use.

Jennifer Anderson, head of sustainability at Carrier, advised companies to start small, breaking their climate commitments “into smaller pieces to make it very specific, very tangible, and set some very specific goals.” Jimenez echoed that advice. “Don’t let the enormity of this paralyze you. Just get started, and as Jennifer said, break it down into small pieces…Because the way we set objectives, the way we measure, and the way we report on this is going to evolve over time.”

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Russian gas

The saga of Europe’s Russian gas supply continues, after Russia stopped supplying Poland and Bulgaria because they refused to pay for it in rubles (a Putin ploy designed to prop up the currency and humiliate his adversaries). Despite warnings from the European Commission, large EU energy companies are reportedly preparing to open ruble accounts at Gazprombank. (Bonus read: Fortune’s Nicholas Gordon on why it’s not so easy for Russia to actually turn off the taps.) Financial Times

Archegos indictments

Bill Hwang, the owner of collapsed hedge fund Archegos, has been indicted on charges of defrauding investment banks and brokerages. So has his former CFO, Patrick Halligan. Associated Press

Europe and Ukraine

The EU will likely establish what is effectively a temporary free trade zone with Ukraine, to help the latter’s economy over the next year. The European Commission proposed the move yesterday, a couple of days after the U.K. did the same. Meanwhile, the U.S. still maintains Trump-era 25% tariffs on Ukrainian steel. Fortune

Meta ruling

The EU’s General Data Protection Regulation is tough but insufficiently enforced. A new ruling from the EU’s top court could change that, as it confirmed consumer protection organizations have the right to bring legal actions against Meta/Facebook, without even needing to identify a particular consumer whose data-protection rights have been breached. Reuters

AROUND THE WATERCOOLER

Recession watch

Less than a month ago, Deutsche Bank predicated a mild recession in the U.S. Now it’s up/downgraded that prediction to “major recession” around the end of next year. Fortune

Dorsey windfall

Twitter cofounder Jack Dorsey has been effusive in his praise for Elon Musk’s $44 billion Twitter takeover, and why shouldn’t he be? After all, he stands to make $270 million from the deal. Fortune

Carnival CEO

Carnival CEO Arnold Donald is stepping down in a few months’ time, which will further deplete the already-thin ranks of Black CEOs in the U.S., with only five remaining in the S&P 500. Donald successfully steered the cruise company through the pandemic, and news of his departure caused a 6% drop in Carnival’s share price. Fortune

Housing boom

Fortune’s Shawn Tully examines the increasing disconnect between inflation and the pace at which mortgage rates are rising: “Periods of fast-rising prices are good for homeowners who are making the usual fixed-monthly payments, especially when their mortgage rates are lot lower than the pace of the consumer price index.” Fortune

This edition of CEO Daily was edited by David Meyer.