Engaging Boards of Directors on Sustainability is a Key Success Factor

Boards of directors can play an invaluable role helping a company to inculcate sustainability into their DNA. Because of their unique position, boards of directors are well placed to integrate sustainability into business strategies and practices. This supports both the long-term profitability and the viability of an enterprise.

However, there is a disconnect between what is good for a firm and what they are actually doing. Most boards of directors are not engaged in sustainability even though almost all managers and directors think they should be.


Benefits
Companies that have engaged boards of directors are more than twice as likely to successfully accomplish their sustainability initiatives. Sustainability has become a mainstream phenomenon and benefits of sustainability have been well documented. This includes a plethora of research that demonstrates strong ROI.  While success is correlated with companies where colloboration was supported by boards, the success rate is cut in half when company boards where not involved.


Failure to engage

Despite the benefits, many boards of directors are not getting involved in sustainability. The disconnect between what is good for a company and what they are actually doing represents a missed opportunity. Research conducted by MIT Sloan Management Review, The Boston Consulting Group and the UN Global Compact, indicates that 87 percent of managers and executives think boards of directors should be engaged in sustainability yet the research suggests that only 10 percent are actually engaged.  An annual report from The Conference Board titled CEO Challenge suggests that CEOs are not turning to their boards of directors to address sustainability challenges.

Collaboration

Almost all managers and executives (9 out of 10) say that sustainability requires collaboration. According to these executives and managers, collaboration serves reputation and brand building, innovative products and services and the transformation of markets towards sustainability. Collaboration between companies, workers, governments, civil society, investors, and academia can augur a range of societal benefits including putting pressure on suppliers to develop a responsible global supply chain.

Antidote to short termism

One of the problems associated with sustainability is the failure to lay out a long-term strategic view. Getting boards of directors to engage with sustainability enables a company to develop long-term` strategic thinking. This includes longer term forecasting, planning, and preparation. It also enables companies to do a better job of zeroing in on risks and opportunities. Together this contributes to a focus on long term success.

Take-away

The take-away is clear, boards of directors should be given explicit oversight of sustainability issues and boards need to allocate time to sustainability issues. It is also highly desirable to have board members with expertise in the sustainability particularly those areas that are most material to the company.

Resources

Two years ago the UN Global Compact launched a program to help "move sustainability issues from the backroom to the boardroom". This program is tailored to the needs of the individual company and delivered in-house by a roster of international experts.

The UN Global Compact Program helps Boards to:

• Align on the strategic imperative and materiality of corporate sustainability as critical for the company’s long-term viability
• Realize the integral role that Board members can and should play in overseeing, incentivizing and driving corporate sustainability, by embedding it into Board duties, composition and structure
• Take action to demonstrate leadership on Board adoption and oversight of corporate sustainability with investors, employees, customers and other stakeholders

For more information and strategic guidance consult the following documents from the UN Global Compact:

Joining Forces: Collaboration and Leadership for Sustainability
A New Agenda for the Board of Directors: Adoption and Oversight of Corporate Sustainability
Corporate Sustainability: An Important Agenda for Boards Of Directors


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Event - The Sustainability Summit 2017

This Summit will take place on March 23-24, 2017 in London. What does COP21 and the push for greater environmental sustainability mean for business? The Sustainability Summit will bring together key thinkers, policymakers and business leaders, who will deliver strategies, ideas and solutions to decision makers, helping them to turn challenges into new opportunities and prepare for the future.

The issue of sustainability is a multifaceted one, and cannot be tackled by policy alone; international business must also rise to the challenge of reversing the damage that we have wrought on our environment. But how can businesses evolve and develop their practices to improve their footprint? Is it possible to make adjustments that have a net positive impact on revenue? And what are the challenges that multinational companies face in implementing such changes across borders?

In March 2016, The Economist Events’ Sustainability Summit in London delivered an alarming prognosis: adapt or die. This year we will be evaluating progress and the scalability of sustainability initiatives while asking the crucial question: what does COP21 and the push for greater environmental sustainability mean for business? Bringing together key thinkers, policymakers and business leaders the Sustainability Summit will deliver strategies, ideas and solutions to decision makers, helping them to turn challenges into new opportunities and prepare for the future.

Speakers

Bob Collymore
Chief Executive Officer, Safaricom

Daniel Franklin
Executive Editor,
Editor The Economist

Helen Hai
Chief Executive Officer,
Made in Africa

Miranda Johnson
Environment Correspondent
The Economist

Greg Lowe Global
Head of Resilience and Sustainability,
Aon

Jeremy Oppenheim
Programme Director,
Business and Sustainable Development Commission

Steve Waygood
Chief Responsible Investment Officer,
Aviva Investors

Mark Wilson
Chief Executive Officer,
Aviva

Why attend? Questions that will be answered

What steps can we take to break the prevailing short-termism which dominates the markets and begin to act with an eye to the future? How can policy-makers better address market failings and encourage a move toward a circular economy? In what ways do our current, global regulatory frameworks account for climate change? How can we leverage the capital markets and big business to create a more sustainable economy? Where should investors direct their capital in order to make the biggest impact? From source to shelf, how can businesses take better stock of natural capital and ensure resource efficiency all the way across their supply chains? Could technological innovation provide some of the solutions we need to deliver sustainable growth? And, how can we scale the green tech that already exists? How can we further the social components of the SGDs and create a more inclusive marketplace around the world?

Attendees will

• Network with more than 200 international leaders from business, finance and government Make connections with those at the forefront of the sustainability effort and discover new opportunities for cross-border and cross-sectoral collaboration
• Shape the evolving dialogue on sustainability and share ideas with decision-makers and innovators
• Get to grips with practical steps businesses are taking to scale-up action and create the swift change we need to realise the transition to a two degree world
• Gain a fresh perspective on sustainability as a value driver and differentiator for business and finance
• Join the global effort to create an inclusive and environmentally sustainable marketplace

To register click here.

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How Sustainability has Become a Mainstream Phenomenon

Sustainability programs are not just for forward-thinking international conglomerates they are now part of mainstream practices for business both large and small. The data has convincingly made the case that sustainability is good for business and managers are integrating it into their strategies in ever increasing numbers.

There are a number of good reasons why businesses are embracing sustainability. In 2015 sustainability reached a tipping point and in 2016 it has become obvious that sustainability is a 21st-century megatrend. We are even beginning to conceive of a post sustainability world.

At the end of last year leading businesses made carbon reduction pledges at COP21. US companies like Apple, Microsoft, Mars, Ikea and others filed legal briefs supporting President Obama's the Clean Power Plan and corporations are embracing renewable energy in unprecedented numbers. As a result, corporations are increasingly decoupling their growth from their emissions. They are also adopting science-based emissions reduction targets.

As reported by Environmental Leader, the Conference Board’s annual CEO Challenge survey, indicated that sustainability was considered to be among the top five global challenges. What makes this remarkable is the fact that this is the first time that sustainability has made it into the survey's top five.

The most recent UN Global Compact-Accenture CEO Study report finds that 70 percent of major corporate executives see climate change presenting growth opportunities for their company within the next five years. A 2014 McKinsey survey finds 43 percent of executives say their companies are looking to align sustainability with their overall business goals, up from 30 percent two years earlier.

In the 2016 State of Responsible Business Report, 71 percent of corporate/brand respondents said that their CEO is convinced of the value of sustainability. There has been and almost ten percent increase in execs who feel that sustainability is integrated tightly enough into broader business strategies. More than half of Apparel, FMCG and Manufacturing respondents said that they pay for external assistance with their sustainability strategy.

The ROI on sustainability is supported by a number of studies which demonstrate the business case for sustainability. Sustainability not only drives profits it also contributes to cost savings through efficiency. The ROI on sustainability is best illustrated by Unilever which has attributed half its growth to sustainability in 2015. Unilever is but one of many companies that have generated a billion dollars or more each year from sustainable products or services. Some of the other companies profiting from sustainability are General Electric, Ikea, Tesla, Chipotle, Nike, Toyota, Natura and Whole Foods.

This data leads to the common  misconception that sustainability is only for the large corporate players and not for SMEs. Nothing could be further from the truth. Not only do small businesses share in the responsibility to be better stewards, they must also address competitive pressures to promote their brand, increase revenues, and decrease costs.

There are a number of easy things that even small businesses can do that will decrease the net costs of their operations. From going paperless to reducing packaging, sustainability programs are for all businesses regardless of size. The single most important thing that any smart business must do is carefully scrutinize and manage their energy usage.

Adopting sustainability is no longer a choice it is a market dictate.  In fact it is safe to say that businesses are thriving with sustainability and risk dying without it.

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Organizations and Individuals Coalesce for Action on Climate Change

There is a powerful synergy building between grassroots activism and those who are working with governments and the private sector. The United Nations, companies, investors, activists, environmental groups and coalitions are coming together to call for action on climate change.

We saw the largest climate protest in human history on September 21, 2014. A total of 2,600 events took place in 166 countries around the world as part of a global call for action on Climate Change. In New York City, the People's Climate Events saw an estimated 400,000 people come together. This involved 1,576 organizations and hundreds of thousands of social media posts. From students to senior citizens, people of every age, ethnicity and ideology were represented at this march. This unprecedented event sent a clear message to leaders at the UN Climate Summit on September 23.

The importance of this march was eloquently summarized by EDF Sr. Vice President of Strategy and Communications Eric Pooley, who said, "This march shot down, once and for all, the old canard that Americans don't care about climate change. And it reminded me what an extremely big tent the coalition for climate action really is — with plenty of room for groups with vastly different views."

The 125 heads of state joined business and civic leaders assembled at the UN Climate Summit seemed to get the message as there was real progress not seen at previous summits. The business community joined investment groups and governments in making bold pledges for serious action that included everything from methane reduction to carbon pricing and forest preservation.

Whether taking to the streets and demanding change or working to address market shortcomings and government regulation, millions of people are coalescing to advance action on climate change.

Environmental Defense Fund President Fred Krupp said, "both are absolutely essential to the climate solutions we need." Krupp went on to say, "a strong outside game needs to be complemented by a strong inside game. To translate people power into action, we need to develop policies and practices that will sharply reduce the greenhouse gas pollutants we’re pumping into our atmosphere."

As Krupp explained, "Moving the world away from carbon-based energy requires fundamentally changing the economic incentives in our system..."

To assist and support this effort a number of coalitions have been formed including, We Mean Business, Sustainability Charter, Ceres Declaration, and Global Divest-Invest.  Some businesses have even pledged to transition entirely to renewable energy for Climate Week NY.

The diverse array of people and organizations that are coming together gives us reason to hope that we may see a global climate treaty in 2015.

© 2014, Richard Matthews. All rights reserved.


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Business Leadership at the UN Climate Summit

The recent UN Climate Summit on September 23, 2014 was different from previous meetings and one of the primary reasons for this is the fact that the business community is showing real leadership. As should be obvious to all, we will not be able to make substantial cuts in carbon emissions without support from the business and industry.

"The inclusion of business at the summit and over the past few years is a recognition that climate change is not a one-person issue," said Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, during a briefing call before the summit. "It is not a one-sector issue. It cannot be solve by one country, one sector, by one level of government. Climate is an every-person issue, and it requires everyone to work collaboratively in order to reach the solutions to the level and at the speed that we need to find."

At the summit companies made a total of eleven major pledges. This includes efforts to decrease deforestation, and support carbon pricing. Even key players in the oil and gas industry committed itself to reducing methane emissions.

Speaking to the subject of methane reductions, Nathaniel Keohane of the Environmental Defense Fund said, "This is an enormous opportunity" He went on to explain that methane is a potent greenhouse gas that accounts for one quarter of global warming.

A number of business coalitions are also working to increase sustainability, divest from fossil fuels and invest in renewable energy. This includes the We Mean Business Coalition, the Sustainability Charter for Business, and the Global Invest-Divest Coalition. Some companies have signed on to campaigns pledging to go 100% renewable

Investors are also showing leadership on climate change. As part of organizational effort like the Ceres Declaration, investors are also putting their money where their mouth is and supporting carbon pricing and clean energy initiatives.

"This is very different. It's not just policy leaders," says Mindy Lubber, president of Ceres. There's an "unprecedented" number of companies, investors and finance ministers involved, she says.

"It's a good news story I never would have predicted," says Charles McNeill, a senior policy adviser for the United Nations Development Program. He explained that we are seeing new new partnerships and coalitions forming and while these are mostly major companies, smaller ones will likely follow their lead.

"It's a very, very positive sign," Todd Stern, U.S. special envoy for climate change, said in a recent White House briefing. "Business is increasingly focused on trying to, in some cases, be part of the clean energy revolution."

The business communities involvement has never been more urgent, because as explained by Figueres, "We are running out of time...We can no longer afford the luxury of being gradual or incremental. We need very, very stark changes right away."

If leaders in the business community keep stepping up to the plate, it gives us reason to believe that hope for a climate agreement in 2015 is justified.

© 2014, Richard Matthews. All rights reserved.


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Corporations Go 100% Renewable for Climate Week NYC

During Climate Week NYC, corporations stepped forward with ambitious renewable energy plans. The business leaders that gathered in New York for Climate Week are working to encourage the corporate world to take meaningful action on climate change. As part of a campaign, called RE100, more than a dozen corporations made pledges to derive all of their power from renewable sources of energy in honor of Climate Week NYC.

The RE110 campaign encourages 100 of the world's largest businesses to commit to get all of their power from renewables by 2020. RE100 is convened by The Climate Group in partnership with CDP. RE100 is an action of the WE MEAN BUSINESS coalition.

As explained on RE100 website, "Accelerating the scale up of renewable energy will help us deliver a better, healthier more sustainable world for what will soon be 9 billion people. Renewable energy investment is also a smart business opportunity. In addition to providing clean power for a business, renewable energy investment can provide financial returns compatible with - and in some cases even higher than - other mainstream investment options."

Here is a list of the early signers (IKEA and Swiss Re were the founding sponsors):

BT
Commerzbank
FIA Formula E
H&M
IKEA
KPN
Mars
Nestle
Philips
Reed Elsevier
J. Safra Sarasin
Swiss Re
Yoox

"We decided on a 100 percent renewable power approach because as a leading wholesale provider of reinsurance and insurance we believe that tackling climate change while meeting the energy needs of a growing and developing world is an urgent matter. This can only be done by improving energy efficiency and switching to low carbon options including renewable energy sources," said Jurg Trub, head of environmental and commodity markets for Swiss Re.

© 2014, Richard Matthews. All rights reserved.


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Event - Responsible Business Forum on Sustainable Development

This event will take place on November 24 - 25, 2014 at Marina Bay Sands in Singapore. The Responsible Business Forum on Sustainable Development is subtitled "Building Prosperity through Economic, Social and Natural Capital." It will gather business leaders, NGOs and policy-makers from around the world to share practical solutions for sustainable growth and creating shared value with economic, social and natural capital. Topics discussed will include disruptive innovation, equitable growth, the sustainable supply chain, clean energy access, next-level integrated reporting and harnessing the natural assets of cities.


Agenda Topics Include

• Plastics, packaging & recycling
• Net positive workshop – A restorative approach to energy, water and forests
• Real solutions to transboundary haze – Finance, technology & small-holder farmers
• Inclusive business and the extractives sector

There will be be Keynote addresses by

1) Luisa Diogo, former Prime Minister, Mozambique & member, UN Secretary-Generals High-level Panel on Sustainable Development and
2)Peter Bakker, President, World Business Council for Sustainable Development

Discussion Panels

1. There will also be a discussion panel on disruptive innovation and new opportunities for equitable economic growth. While the global economy has soared to more than US$75 trillion nearly half the world population still lives on less than US$2 per day and the dream of equitable growth evades us. A radical change to our current economic model will be needed to deliver more equitable and inclusive growth. This panel of global thought leaders will explore how disruptive innovation can deliver economic growth that is both inclusive and sustainable.

2.Another discussion panel will address creating shared value and growth.  This issue will be addressed in the context of a soaring global population demanding more from a planet with finite resources, consumers, suppliers, employees and governments are all expecting more from business. Creating shared value is a model for economic value creation that can simultaneously deliver positive social and environmental results, with new opportunities for growth and for business to deliver more. This panel will discuss a new, total impact approach for creating shared value across all stakeholders, for business, the environment and society.

3. A third panel discussion will address the business case for valuing natural capital. Two-thirds of our planet’s land and water systems have been significantly degraded due to human activity, creating $7.3 trillion in external environmental costs per year. As naturally produced goods and services are compromised or lost altogether, companies could experience supply chain disruptions, be forced to introduce costly alternatives to traditional inputs or face new regulatory and legal risks. This panel will discuss the rapidly growing movement for companies to place a monetary value on natural capital, and present the benefits for business to integrate this into risk management and decision-making.

4. A fourth discussion panel will address responsible business and creating social capital. The term social capital is often used to describe the relationships of trust between organisations and their stakeholders that can be economically valuable. Like economic or human capital, social capital enables us to create value and drive growth. This panel will discuss innovative stakeholder collaborations, the responsibility of business in tackling issues of human rights and how smart investment in social capital can benefit both business and civil society for a better future. 

5. A fifth discussion panel will address the world’s most sustainable stock indexes launch. With the majority of the world’s largest companies now reporting key environmental metrics, and investors representing $45 trillion in assets signed up to the UN-sponsored Principles for Responsible Investment, corporate disclosure and investor interest around sustainability have crossed the Rubicon. The revolution in corporate sustainability disclosure and investment integration presents an opportunity to fix the feedback loop between companies and investors so that sustainability factors are given due consideration. This discussion will provide an around the world tour of sustainability disclosure trends followed by a discussion of how the revolution in corporate sustainability disclosure has opened up a new era for investors and corporations to work together to achieve impact at scale.

6. Responsible Business Parallel Sessions Sharing, learning and industry peer collaboration 1. Traceability and the sustainable supply chain 2. The business opportunities in waste and recycling 3. Next-level integrated reporting 4. Urbanization and smart system technologies 5. The future of zero emission transport in Asia 6. Collaborative education in developing and emerging markets 

Responsible Business Working Groups

High-level working groups will bring together business leaders, NGOs and policy-makers from around Southeast Asia to agree on commitments and policy recommendations to increase sustainability across six sectors – agriculture & forestry, building & urban infrastructure consumer goods, financial services, renewable energy and shipping. Recommendations from these working groups will be presented to decision-makers and policy-makers at a series of regional meetings in 2014. Preparation for the working groups will begin with a series of webinars, one around each of the six sectors. Commitments and recommendations from businesses will then be drafted and later discussed, developed and decided on by delegates at the Forum in November. The working group Chair will moderate a panel discussion on the recommendations, followed by facilitated roundtable discussions with the participants.

Roundtables

1. Building and urban infrastructure Chair: Jessica Cheam, Founder & Editor, Eco-Business
2. Consumer goods Chair: Jon Johnson, Chairman and Academic Director, The Sustainability Consortium
3. Financial services Chair: Jessica Robinson, Chief Executive Officer, ASRIA
4. Food beverage and agriculture Chair: Tod Gimbel, Managing Director, Landmark Asia
5. Forestry Chair: Rodney Taylor, Director, Forests, WWF International
6. Renewable energy Chair: Nathaniel Bullard, Director of Content, Bloomberg New Energy Finance
7. Shipping Chair: Alastair Fishcbacher, Director, The Sustainable Shipping Initiative

For the speakers list, agenda and registration click here.

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Video - The Worldwide Charter for Fair International Commerce

The Worldwide Charter for Fair International Commerce is free of charge project that has been developed by the International Businesses Standards Organization (IBSO) to be a code of conduct and a minimal set of universal principles for the international business community. This IBSO's initiative allows for participating organizations to formally proclaim their commitment to promote sustainable and positive business practices with respect to social and environmental values. Every Worldwide Charter for Fair International Commerce signatory have a right to use the Charter Signatory logo on site and in other advertising purposes and being listed in Catalogue on IBSO's official site.

For more information click here.

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