Issues in Establishing Effective Sustainability Governance

CSR and corporate sustainability are like any other important management initiatives and require proactive leadership from the top of the organization.  In fact, it is clear that the “tone at the top” is an important factor in the success or failure of any CSR or corporate sustainability initiative and the directors and senior executives of the corporation are uniquely positioned to act as external and internal champions of CSR and corporate sustainability and proactively communicate with everyone involved with the organization on a daily basis about the impact of new environmental and socially responsible products and services.  The directors and senior executives must also commit to investing the time and effort necessary to explain the corporation’s CSR and corporate sustainability initiatives to customers and other stakeholders and develop and implement metrics for tracking and reporting progress.  While environmental and social responsibility certainly extends “beyond the law”, directors and officers must be mindful of their fiduciary duties and understand how laws, regulations and standard contract provisions are rapidly evolving to incorporate environmental and social responsibility standards.  Among the issues and activities that will need to be considered in establishing and maintaining effective governance and management processes for CSR and corporate sustainability implementation are the following:

• Understanding the drivers of enhanced board oversight of sustainability including investors’ expectations as to the role and responsibilities of directors and changing societal beliefs regarding the political and social roles of corporations
• Understanding how CSR and corporate sustainability is changing the traditional fiduciary duties of directors and officers including the ascendance of the stakeholder-focused model and the introduction of alternative legal architectures for sustainability-oriented businesses
• Working with the board of directors to integrate environmental and social responsibility into the governance structure and the traditional roles and responsibilities of directors
• Assisting the board of directors on the design and implementation of an effective framework for board oversight of CSR and corporate sustainability
• Counseling the board of directors and senior management on the development and implementation of CSR and corporate sustainability commitments and instruments
• Incorporating reports on CSR corporate sustainability initiatives into board meetings and understanding how to create effective environmental and social responsibility committees and integrate sustainability into the activities of other board committees
• Developing job responsibilities for the senior social responsibility officer and designing effective internal organizational structures and systems for managing CSR and corporate sustainability initiatives and programs and supporting CSR and corporate sustainability commitments and expectations such as preparation and distribution of sustainability reports and stakeholder engagement
• Implementing formal management systems relating to sustainability-related issues and topics based appropriate standards issued by the International Organization for Standardization (e.g., ISO 14001 (environment); ISO 26000 (social responsibility) and ISO 28000 (supply chain security))
• Reviewing and modifying job responsibilities and compensation arrangements of executive team members, particularly the chief executive officer, to incorporate CSR and corporate sustainability commitments and attainment of CSR- and sustainability-related performance goals
• Providing education and training to directors and executive team members on sustainability issues including the creation and management of stakeholder advisor groups and teams of external experts
• Assisting directors, executive team members and managers and employees within the internal sustainability group with key CSR- and sustainability-related activities such as transparency and disclosure and stakeholder engagement
• Identifying and counseling directors and officers on ethical issues that will arise as they discharge their duties and responsibilities with respect to CSR and sustainability

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 LinkedIn, Twitter and Facebook.