“Value creation, long-term business resiliency, strategic risk management, and stewardship represent the essence of the board’s role in overseeing corporate sustainability activities. Sustainability oversight is increasingly becoming a board-level issue for several reasons. First and most fundamentally, boards are meant to safeguard the assets of the companies they serve, and one of the trickiest “assets” to understand, let alone protect, is the company’s social license to operate. Second, the ways in which a company affects, and is affected by, global mega-trends such as population growth, an expanding urban middle class in emerging markets, demographic change, resource scarcity, climate change, and transformative technologies—all of which fall under the rubric of sustainability issues—are often at the core of board-management discussions about strategy, risk, and performance. Thus, understanding how a company executes its business model within a changing operating context, and with an eye toward long-term profitability, is squarely a board issue and a director’s responsibility.” This powerful paragraph leads the National Association of Corporate Director’s (NACD) new handbook. “Oversight of Corporate Sustainability Activities.”
The report presents four recommendations:
• Directors should understand the company’s definition of sustainability in the context of the company’s strategy and specific circumstances.
• The board and management should align on the sustainability message and information the company chooses to report publicly.
• Boards should clarify roles for oversight responsibility of sustainability activities, including external reporting.
• Directors need to establish parameters for sustainability reporting to the board regarding the information required to support robust discussions with management.
The report suggests that one third of U.S. companies have board oversight of CSR initiatives.
Earlier this month I attended the annual NACD Board Leadership Conference. Corporate Social Responsibility and Sustainability were topics I was pleased to see covered within a variety of the subject matter presented. There was also a breakout session and peer exchange forum set on the specific topic.
Some takeaways: What does oversight and governance of sustainability activities mean? This was the question posed at the break out. Comments included: “Not one size fits all.” “Driven by risk and opportunities profile.” “What is happening within the sector/industry?” “What is the corporate culture?” “What is the potential of the issue to create material impact to the business in the future?” The phases of CSR communications: “What should we be doing?” “Look what we are going to be doing.” “Look at the great things we are doing.”
The theme throughout the session is that Sustainability, or Corporate Social Responsibility, is migrating from risk and cost cutting to seizing opportunities and being an integral part of the company’s values. An import step in the right direct!
http://www.nacdonline.org/Conference/index.cfm?itemNumber=3370
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