Sustainability in the Boardroom

Abstract

Research by The Conference Board shows that, despite formal assignment of responsibilities to top business leaders, many companies still lack the structural framework to enable proper director oversight of corporate sustainability. In particular, what appears to be largely missing is access to independent sources of information as well as the detailed procedures and metrics for effectively integrating social objectives into daily business activities. However, a rapidly developing regulatory climate and the increased sensitivity of enforcement authorities to the risk implications of environmental issues have opened the door to shareholder activism in this field. Most recently, the success rate of social funds demanding change has risen to levels that were unimaginable only a few years ago.

The report illustrates the research findings on the following trends:

• The motivational drivers of board oversight of sustainability initiatives

• Board structure issues, including the allocation of resources and the assignment of responsibility for sustainability initiatives

• The use of widely recognized standards to define and plan sustainability initiatives

• Sustainability performance measures and reporting issues, and

• Corporate response to shareholder activism in this area.

Keywords: sustainability, environment, social, governance, board, directors