IAG and Virgin Australia chair Elizabeth Bryan says climate change is one of the key issues boardrooms must address if they want to remain in touch with community expectations and stay in business.

Bryan said on Wednesday heightened social and political expectations around corporate responsibility had already begun changing the way businesses operate, and that companies could not afford to dig in their heels.

She said the financial services royal commission proved companies had been too wedded to a model of profit maximisation and now must embrace new expectations, including transparency, consumer wellbeing and action on climate change.

“You really have to get across the changes,” Bryan told the annual Stockbrokers and Financial Advisers conference in Sydney.

“One, changes from the social issues we’ve been talking about, and the other is the technology….. if a company gets either of those wrong, they are out of business.”

Bryan said rising to changing community standards would be a painful process for many businesses, but not necessarily a barrier to profit growth.

She said the art of management should be to balance short-term gains with long-term investment, and embrace the value of intangible assets

“And the intangible assets and their value is built up through not only delivering a high operating company but in this wider perception of the value of customers, the reputation of your brand, of how you fit into society, and the end the role you play in society,” she said.

“It comes back through books.”

Addressing and mitigating climate risk is another social and economic challenge companies must accept, Bryan said.

She said data from IAG showed changes in the climate and that the impacts were heading “in a bad direction”, posing a systemic risk for the health of businesses if not addressed.

“All companies need to understand that,” Bryan said.

“And we need to also, I think, be very clear about what companies in (the insurance field) could do to ameliorate, mitigate, protect, and just generally deal with it.”

With AAP.