Integrating Sustainability into Governance Policies and Processes

Companies often designate a corporate secretary or another person to oversee administrative matters relating to governance processes.  Someone in this position would normally be expected to maintain relevant governance processes and structures through regular reviews and updates to the board manual and other governance documents; keep current on evolving practices in corporate governance and advise the board and the board’s governance committee; serve as chief expert and adviser on all corporate governance matters for directors and employees; serve as executive liaison to the governance committee; and administer the corporate code of conduct and other board policies.  With respect to sustainability, a Global Compact publication recommended that the aforementioned traditional duties be supplemented to include monitoring the external environment to remain fully informed of corporate sustainability governance trends, emerging issues and best practices, especially those of relevance to the sector or key issues; informing the governance committee on trends and changes in best practice corporate sustainability governance and regulator expectations; determining and implementing amendments to governing documents, processes and structures to incorporate sustainability oversight roles for the board; ensuring that executives and key employees understand the emerging trends in corporate sustainability governance; and, along with members of the executive team, ensuring that the board regularly reviews, updates, and monitors compliance with corporate sustainability policies.

This article is adapted from material in Sustainability and Corporate Governance: A Handbook for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.

Additional specific actions that should be taken with respect to corporate sustainability governance include the following:

  • Ensuring the “sustainability oversight” is included the formal record of the roles and responsibilities of the board and individual directors
  • Informing the chairperson of the board and the chairperson of the relevant board committee about trends and best practices in corporate sustainability governance
  • Support management’s relationship with the board by informing the CEO and chief sustainability officer, if any, of trends and best practices in corporate sustainability governance and assisting management with bringing sustainability risks and opportunities to the board’s attention
  • When assisting the chairperson of the board and the CEO in preparation of board agendas making sure that there is sufficient time for sustainability discussions in relation to all matters coming before the board to which sustainability is relevant and reports from the sustainability committee and ensuring that meeting packages include sufficient information of sustainability impacts, risks and opportunities, including stakeholder considerations, for the board to make informed decisions
  • Ensuring that board discussions of sustainability and stakeholder consideration are included in minutes of meetings of the full board and relevant board committees
  • When supporting the board in developing and implementing recruitment criteria for new directors (i.e., skills, experience, attributes, diversity etc.) making sure that diversity is included as a board composition factor and focusing on increasing the number of women on the board and diversifying the composition of the board with respect to skills, ethnicity, cultural background and age (e.g., recommending that sustainability be included in the skills matrix and that at least one director have skills/experience in corporate sustainability including executives with a successful track record on sustainability or topic experts)
  • Including sustainability within the new director orientation, including an overview of sustainability risks, opportunities, strategy, performance, standards, policies and key stakeholders and their priorities, etc.; and sessions with sustainability leaders in the organization. Include a copy of the company’s most recent sustainability report in the orientation manual
  • With respect to board and director training, securing time during board and committee meetings for education and in-depth review of sustainability risks, opportunities, impacts, trends and dependencies, including stakeholders and their key issues, to ensure that directors have the proper information and knowledge; including sustainability education sessions in the board calendar; and identifying sustainability education opportunities for directors
  • Ensuring that the board’s evaluation processes assess board and director sustainability skills, experience and contribution (e.g. do directors feel informed about sustainability trends and issues as they impact the company, its value chain, industry and operating context; effectiveness of the Board’s role in monitoring the company’s sustainability performance; whether the board demonstrates a commitment to sustainability in its decisions and actions; whether the director demonstrates knowledge of the sustainability policy and strategy and their application to the business, the degree to which sustainability is considered in board decisions, etc.) and that results are used to inform training, procedures or recruitment
  • Including disclosure on corporate sustainability governance practice and sustainability results in annual and sustainability reports following internationally accepted reporting standards (e.g., Global Reporting Initiative Guidelines) and in shareholder communications and ensuring effective board-stakeholder relations (e.g., through the establishment of an expert sustainability or stakeholder advisory committee to the board)

Sources for this article included The Essential Role of the Corporate Secretary to Enhance Board Sustainability Oversight: A Best Practices Guide (United Nations Global Compact, September 2016).

This article is adapted from material in Sustainability and Corporate Governance: A Handbook for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.

Alan Gutterman is the Founding Director of the Sustainable Entrepreneurship Project, which engages in and promotes research, education and training activities relating to entrepreneurial ventures launched with the aspiration to create sustainable enterprises that achieve significant growth in scale and value creation through the development of innovative products or services which form the basis for a successful international business.  Visit the Project’s Library of Resources for Sustainable Entrepreneurs to download handbooks, guides, articles and other materials relating to sustainable entrepreneurship and keep up with the Project’s activities by following Alan on LinkedInTwitter and Facebook.

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