Sustainability: From the Back Room to the Board Room

by N. Craig Smith for INSEAD Knowledge

Creating a sustainable future takes more than good intentions. Boards of directors have an obligation to help drive a strategic approach to corporate sustainability.

While environmental, social and governance (ESG) issues are becoming mainstream for corporations and the wider public, much more has still to be achieved. It is fairly well accepted that promoting sustainable practices can affect the long-term economic performance of a company. Organisations are beginning to understand that addressing sustainability is about managing risks and opportunities for growth, and developing solutions that respond to the future demands of customers, other stakeholders, and the needs of the planet.

What is not so well-recognised is that ESG issues need to be considered at all levels of decision-making, and that, as the highest decision-making corporate bodies, boards have an essential role to play in driving, overseeing and incentivising corporate sustainability across the organisation. It is up to directors not only to initiate sustainable practices, where absent, but also to ‘join the dots’ for employees, investors, customers and other stakeholders to demonstrate how a company’s actions today can have a real impact on its profitability in the future, if not its survival. This can be done in relation to many board agenda items, not just where sustainability is explicitly up for discussion.

Board members, of larger organisations at least, will most obviously discuss sustainability in the context of the company’s sustainability report. However, this is far from the end of the story.  They need to realise that sustainability issues are interlinked with nearly every decision they make as a director. Read more.

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