CSR Board Committees

While corporate social responsibility (“CSR”) and corporate sustainability need to have an important place on the agenda for full board meetings, larger companies typically rely on one or more committees when it comes to allocating specific tasks and tapping into specialized resources and expertise.[1]  One approach that is growing in popularity is the creation of public policy/CSR, social and cultural responsibility and/or environmental responsibility, health, safety and technology committees composed of a sub-group of the entire board that is charged with focusing more time and effort on sustainability generally and important topics within sustainability. While other board committees focus on internal controls, financial disclosure and reporting, and the procedures of board and committee activities, CSR committees concentrate on strategies for ensuring that the company is seen as a good “corporate citizen.”  A committee of this type is seen as important in light of the downturn in the public’s trust of corporations due to the recent accounting scandals.

An analysis of all committee charters at S&P 100 firms conducted by Calvert Asset Management in 2010 found that 65% of those companies provided for sustainability oversight through at least one committee, with high-impact sectors more likely to have such committees, and that such committees typically focused on sustainability, corporate responsibility, corporate citizenship, environment, human rights, safety, health, social and the community.[2]  A March 2014 study of board oversight of sustainability issues among S&P 500 companies commissioned by the IRRC Institute and authored by the Sustainable Investments Institute (the “IRRC Study”) found that 55% of the companies had implemented some form of board oversight of social issues.[3]  A report issued by the EY Center for Board Matters in December 2016 on how board committees among S&P 500 companies have evolved to address new challenges stated that the CSR committees among those companies generally were responsible for reviewing the company’s policies and practices related to specific public issues of concern to shareholders, the company, employees, communities served and the general public, with oversight of corporate responsibility, environmental sustainability, diversity and inclusiveness, and/or brand management efforts.  The sectors most likely to have a CSR committee included financial services, consumer discretionary and materials

Global Compact LEAD argued that there are a number of reasons why companies, at least during the early stages as they begin to deal with corporate sustainability, may actually benefit from the establishment of a standalone committee at the board level focusing on sustainability.[4]  For example, it significantly increases the amount of time that board members can dedicate to these discussions and increases the visibility of the board’s commitment, thus sending an important signal to both internal and external stakeholders. On the other hand, boards need to be careful that relying on a separate committee reduces the uptake of sustainability by all of the directors and hampers integration into other functional committees.  Global Compact LEAD observed that directors serving on a sustainability committee must carry significant weight and have a high standing on the board in order to ensure that committee decisions are given high priority throughout the boardroom, a factor that has led to the appointment of the chairperson of the board to sustainability committees, and that a high degree of interaction between this committee and the other specialized committees with relevant responsibilities should be ensured to increase coordination and maximize synergies.  Coordination among committees can be enhanced by having representatives of other relevant committees, as well as the board chairperson, serve on the sustainability committee.  The role of the committee will likely evolve as time goes by and the committee may actually be dissolved at the point where sustainability has been fully embedded in the mindsets and deliberations of all of the directors.  Even if the committee does remain in place, its role may be that of a “coordinator”, with strategies, commitments and targets being set by the entire board and the committee providing support with the assistance of an internal sustainability office.

The CSR committee should have a charter which has been developed through extensive discussions by all of the members of the board that demarcates the duties and responsibilities of the committee and its relationship to the entire board, other board committees, the management team and the stakeholders of the company.  There is no universal template for a CSR committee charter; however, it is recommended that the drafters consider including provisions that describe the overall purpose of the committee; relevant guidelines with respect to composition and procedures; the duties and responsibilities of the committee; the rights and expectations of committee members regarding support for the committee’s activities; and procedures for regularly assessing the performance of the committee and, as necessary, making changes to the charter.  Some of the unique topics that might be covered in such a charter include review of various activities relating to the promotion of the company’s public image, including advertising, community relations and charitable contributions; review of company policies and programs relating to ensuring compliance with laws and regulations involving the environment, safety and health; review and consideration of company involvement in claims and litigations; and review and evaluation of the company’s legal compliance programs and oversight of the activities of the company’s chief compliance officer.  The corporate responsibility committee is sometimes referred to as the corporate compliance committee, although many companies are separating social responsibility from compliance given that social responsibility is typically “regulated” through voluntary standards rather than “hard law”.

The CSR committee charter must include a description of the intended scope of the committee’s duties and responsibility.  The committee’s role will depend on a variety of factors including the extent to which the entire board has reserved primary authority on sustainability topics and the degree to which the company relies on non-board bodies, such as a CSR steering committee, to oversee particular CSR projects.  The IRRC Study found that while some companies simply referred to “social issues” or to a single issue such as “political contributions” or “charitable contributions”, most companies had more detailed descriptions of the duties of committees assigned to oversee social issues that included activities such as the following[5]:

• Reviewing and updating the company’s human rights policy and monitoring reports from management regarding ongoing compliance programs relating to the policy and any reports of possible human rights violations
• Reviewing and updating the company’s safety and health policy and overseeing all safety programs instituted by the company
• Monitoring regular reports from management regarding ongoing compliance with the company’s safety programs and compliance with applicable safety laws and regulations
• Reviewing and updating the company’s community health programs and any public health and medical issues that may affect personnel assigned to any operating location
• Reviewing and updating the company’s community policy and overseeing all governmental and stakeholder relations, and social investment and sustainable development programs, including reports on these programs from management
• Reviewing and updating the company’s political activity and spending practices statement and overseeing the company’s political activity and spending practices, including annual disclosure of the company’s political contributions and those of company-affiliated political action committees
• Overseeing the company’s position and practices on other significant issues of corporate public responsibility such as workforce diversity, data privacy and government affairs strategies (including lobbying activities)

A small group of the surveyed companies decided to assign human rights issues to its own separate committee, rather than including those issues within the broader mandate of a corporate social responsibility committee.[6]  These committees were responsible for addressing oversight of the company’s human and workplace rights policies and monitoring reports from management on compliance with those policies and resolution of reports of possible human rights violations.  Charters for these committees generally made it clear that human rights would be framed in terms of the company’s policies and actions toward employees, suppliers, customers and communities.

In a December 2016 report on how board committees among S&P 500 companies had evolved to address new challenges, the EY Center for Board Matters noted that corporate social responsibility committees of the board were generally was responsible for reviewing the company’s policies and practices related to specific public issues of concern to shareholders, the company, employees, communities served and the general public, with oversight of corporate responsibility, environmental sustainability, diversity and inclusiveness, and/or brand management efforts.  The functions of the committee might overlap with the board’s public policy and compliance committees.  The sectors most likely to have a corporate social responsibility committee included financial services, consumer discretionary and materials.[7]

For more information on the topic of this article, see the author’s book Responsible Business: A Guide to Corporate Social Responsibility for Sustainable Entrepreneurs, which is available here , and materials distributed through the Sustainable Entrepreneurship Project.  Readers may also enjoy the author’s book Board Oversight of Sustainability, which is available for purchase at various online booksellers.

[1] A New Agenda for the Board of Directors: Adoption and Oversight of Corporate Sustainability (Global Compact LEAD, 2012),

[2] Board Oversight of Environmental and Social Issues: An Analysis of Current North American Practice (Calvert Asset Capital Management Inc. and The Corporate Library, 2010).

[3] P. DeSimone, Board Oversight of Sustainability Issues: A Study of the S&P 500 (IRRC Institute, March 2014), 1, 13-14.

[4] A New Agenda for the Board of Directors: Adoption and Oversight of Corporate Sustainability (Global Compact LEAD, 2012), 14.

[5] P. DeSimone, Board Oversight of Sustainability Issues: A Study of the S&P 500 (IRRC Institute, March 2014), 1, 13-14.

[6] Id. at 14.

[7] http://www.ey.com/Publication/vwLUAssets/EY-board-committees-evolve-to-address-new-challenges/$FILE/EY-board-committees-evolve-to-address-new-challenges.pdf