Why it Matters
We believe the real achievements of business are creating profits and contributing to the conservation of our environment and adding value to society and our communities.
Some might argue that no matter how big a challenge, every person counts in making a difference despite their hierarchical status in an organisation. Whereby, we agree that every little helps. We like to think it is also universally agreed upon that large corporations and senior leaders have a certain power to fast track change.
Just think of the power of Facebook to spread information, the many big banks and their ability to finance change, or General Motors who are committed to making the future of cars electric. Being big can be a huge advantage. That’s why this report will be focusing on the world’s largest (public) companies.
So, who is holding the executive teams of these big companies to account? Certainly, it is their shareholders, investors, clients and stakeholders to some extent, but the mandate in the first place lies with their board of directors.
And this is what this report is about: What is the state of boards when it comes to sustainability direction? How comprehensive is their policy and how skilled are the directors?
A recently (2019) published report (1) by Ceres and KKS Advisors has found that best practices for companies intent on establishing effective board governance are the creation of formal board mandates for sustainability, the recruitment of directors with sustainability expertise, and the linking of executive pay to sustainability performance.
Another report from 2014 by Lynne S. Paine of Harvard Business School, one of the world’s experts on board functioning, focuses on sports goods maker Nike’s experience with a sustainability board committee. She suggests that “such a committee can be useful to many companies’ boards in at least five ways: As a source of knowledge and expertise, as a sounding board and constructive critic, as a driver of accountability, as a stimulus for innovation, and as a resource for the full board.” (2)
Inspired by these findings this report focuses on details on board committees and the individuals behind it.
Driving sustainability best practice is also closely tied to diversity. The share of women on corporate boards plays a significant role in meaningful governance. Our report not only touches on the sustainability efforts of boards, but also on the level of female representation on board of directors.
(1) How Board Oversight Can Drive Climate and Sustainability Performance, by Veena Ramani, Ceres, and Bronagh Ward, KKS Advisors , onlinelibrary.wiley.com/doi/abs/10.1111/jacf.12349
(2) Sustainability in the Boardroom, Lessons from Nike’s playbook by Lynn S. Paine. Published by Harvard Business Review, July-August 2014, Reprint R1407G