Memo to the Corporate Board: Heads Up, It’s About Sustainability for the Long-Term
SustainabilityHQ Highlights (04.06.2016)
Memo to the Corporate Board: Heads Up, It’s About Sustainability for the Long-T…
The boards of directors of publicly-traded companies have considerable influence over the many duties and responsibilities for the corporation to attend to. Among them is oversight of risk (the two halves of risk: risk or threat and opportunity inherent therein). We put effective risk management as one of the over-arching elements of corporate sustainability and responsibility. What better way to address risk management duties at board level than to focus on the company’s ESG strategies?
Writing in Forbes, Dr. Bob Eccles (Harvard University, SASB, and Arabesque Partners) focuses our attention on corporate boards and what they are doing – and not doing – to address ESG strategies, initiatives, achievements – as part of their risk management duties as fiduciaries.
“Material ESG sustainability issues are increasingly being factored into corporate and investment decisions at the highest level,” Dr. Eccles observes. “It is resulting in genuine sustainable strategies, instead of mere programs that are viewed as side shows to the company’s business.”
And so, Bob Eccles says, the strategies executed at scale by [some] of the world’s largest companies and investors will also contribute to planetary benefits. (See the UN Sustainable Development Goals (SDGs) for examples of how this is working in the business community. Sign up for The Global Sourcing Council's 17 Weeks / 17 SDGs for weekly insight.) While this is good and welcome news, the world’s largest companies and investors – who control vast amounts of capital – are really not yet showing enough leadership in sustainability, says Dr. Eccles.
The key is for the board room to ensure that the corporation adopts a long-term focus – as forcefully advocated now to investors and corporate leaders by Larry Fink, the CEO of the world’s largest asset manager, Blackrock. The Board should adopt rigorous analysis to identify the limited number of ESG issues that really are material to the company. And then act on them. And oversee the sustainability strategies being implemented at all levels, not just in some minor “set aside” sustainability function as described by Bob Eccles.
Read his fascinating – and challenging – commentary in our top story. Keep in mind that Professor Eccles is the leading voice at the Harvard Business School, and in both investor and corporate communities, for corporate sustainability.
