Frederik Otto, Executive Director of The Sustainability Board was joined by Sonia Tatar, Executive Director of the INSEAD Corporate Governance Centre and INSEAD Wendel International Centre for Family Enterprise and Julia Hayhoe, portfolio NED in private companies and independent board advisor at Hayhoe Consulting.
The panel discussed the evolving landscape of sustainability in corporate governance, emphasising the importance of leadership, strategic alignment, generational inclusivity, and the need for internalisation of sustainability knowledge and practices within organisations.
The roundtable is part of the Sustainable Leadership Preparedness Programme. The below is a summary of the panel’s fireside chat, that was followed by a Q&A:
Sustainability and Governance Overview
Sonia Tatar highlights the transition from understanding the "why" of sustainability to focusing on the "how". She identified three categories of boards in relation to sustainability: early adopters (visionary and proactive), adopters (compliance-focused), and survivors (paralysed by the sustainability challenge, adopting a "delay and pray" attitude).
Assessment and Strategy for Sustainability
Julia Hayhoe emphasised the importance of aligning sustainability with the business’ strategy, mentioning the need for a clear purpose statement that includes stakeholders and the planet. She noted the significance of investor expectations, and CEO mindsets as indicators of an organisation's commitment to sustainability.
Leadership in Sustainability
Tatar and Hayhoe discussed the critical role of leadership in driving the sustainability agenda, highlighting the need for engagement at all levels of the organisation, from the board and CEO to executives and employees. They stressed the importance of setting the right tone at the top and ensuring that sustainability is embedded across the business.
Challenges and Risks of Board Participation
Sonia Tatar pointed out the increasing pressures and liabilities on board members regarding sustainability, which make them cautious about taking on new assignments. There's a noted change in the narrative around board participation, with increased accountability and risk of litigation.
Generational Shifts and Sustainability
The discussion acknowledged the need for incorporating younger generations' perspectives into board decisions, recognising their different mindsets and expectations regarding sustainability. Tatar and Hayhoe both mention the concept of shadow boards, but Hayhoe expressed scepticism about their effectiveness, advocating instead for personal engagement through reverse mentoring.
The Role of Consultants vs. Directors with Specialist Knowledge
Both speakers agreed that while consultants can provide valuable external insights and help build momentum for sustainability initiatives, it's crucial for the knowledge and learning to be internalised within the organisation. Board members should understand sustainability's complexities to drive the agenda effectively.
Engagement of Directors in Sustainability
Frederik Otto mentioned The Sustainability Board’s annual report that found that the engagement of directors in sustainability has increased significantly over the past five years but is now plateauing. This points to the growing recognition of sustainability in governance but also highlights challenges in further increasing director engagement in this area.
Sonia Tatar holds a dual role at INSEAD. She is Executive Director of the INSEAD Corporate Governance Centre and INSEAD Wendel International Centre for Family Enterprise.
She also is an advisory board member with the Nasdaq Center for Board Excellence, and a Board member at Chapter Zero France, as well as an Ex-Officio at the INSEAD Directors Network board.
Sonia is an advocate for environmental, social and governance impact and a big believer in empowerment, engagement & purpose.
Julia Hayhoe is a portfolio NED, and independent board advisor with a focus on leadership and ESG at Hayhoe Consulting.
Until recently she co-led the World Economic Forum’s “The Future of the Corporation Project,” defining the corporate governance, leadership and stakeholder relationships required to advance purposeful sustainable businesses.
Julia’s last corporate role was the Global Chief Strategy Officer and Global Executive Committee member at Baker McKenzie.
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