Governance and leadership are essential for successful integration and effective management of sustainability. Without a solid management structure, the integration of sustainability into management practices will fail.
However, there is no one-size-fits-all solution to creating sustainability governance; each company must create its own approach, taking into account its business model, organizational structure, resources and sustainability maturity level.
Sustainability governance helps a company:
- Implement the sustainability strategy throughout its company,
- Manage goal setting, reporting, and tracking processes,
- Strengthen relationships with external stakeholders while improving general accountability
We share below several generally accepted -and successful- principles when designing a sustainability governance model.
Dedicated and Vocal Leadership: Good leadership and corporate governance are very important for the successful implementation of the sustainability agenda within the company. Having a dedicated leader demonstrates the company’s commitment, provides focus on driving its sustainability strategy and advancing the company’s program.
Internalization of sustainability at all managerial levels, from senior management to lower management is very critical. In order to administer the CEO’s Sustainability agenda, a team or a person can be assigned to develop and spread this awareness within the company. Sustainability leaders vary in different levels and titles such as “Chief Sustainability Officer” (CSO), and can also be the internal and external face of sustainability for the company.
Sustainability Committee / Working Group: Having a cross-functional sustainability committee below the board level, led by the CSO to work across business units, regions and functions, provides greater oversight and strategic guidance. It also mobilizes employees to implement strategies. Committee’s functions may vary, but may include risk management, supply chain, marketing, public relations and communications, human resources, environmental health and safety.
Having a sustainability core team as an alternative to a cross-functional senior sustainability committee can also help coordinate day-to-day activities and implement company-wide initiatives. It is important that this team should interact with business units and functions rather than siloing. A Program by this team can be put into practice by examining good practices on a global scale. This team can follow the latest rules, policies and procedures aiming to determine and manage possible issues that can arise with a risk-based approach. Information such as privileged shares, voting rights, organizational changes can be shared with the public in a transparent way as well, while making critical decisions related to Environmental or Social issues. For instance, widespread international practices such as the “Board Diversity Policy” and the targets of having “at least 30% female members on the board of directors” can be adopted and communicated both internally and externally.
External Advisory Board: Advisory boards can serve as a valuable mechanism to advance the company’s agenda and get outside perspective on various ESG issues. The board may consist of global thought leaders from various organizations such as NGOs, academia, businesses and policy makers.