Open a newspaper or tune into a radio show, and it’s a good bet you’ll run into a story about growing mistrust of companies and their leaders.
The sense that some of our current incentive systems seem to be driving risky — and, in some cases, immoral — behaviour has catalysed a public call for transparency, accountability, better governance and stewardship of our common resources. One major change people seek is commitment to sustainable business principles and subsequent global action.
Luckily, one big step forward for sustainability issues and responsible business leaders already has been taken.
The United Nations Global Compact has formed a new Board Program available to over 8,000 companies in 145 countries across the globe. No doubt that this is not only the first, but likely will be the largest and most influential such program.
The UN program was designed to align and support boards of directors to spearhead sustainable business principles and strategies that will protect nature, people and yes, financial value creation. Ideally, it will help spur innovation and drive environmental, social and financial value.
To define these goals, the program facilitated discussions with board members after a customisation process. A parallel priority was working with the internal team to ensure that the program will match up with existing needs. Facilitators are the individuals who can assist in creating alignment and understanding between company, leadership and key stakeholders.
Strategic sustainability priorities for business leaders were delineated through an initial module:
From there, participants were able to focus more narrowly on defining the role of the board in accomplishing these sustainability imperatives:
Why the board of directors?
Sustainability is an issue that cuts across business units and functions.
With the exception of the CEO, the board is the only corporate unit with oversight for the whole company and the only one solely representing long term share- and stakeholders. That’s in contrast to management and, as such, the unit that can best focus on the appropriate time horizon to evaluate business performance beyond quarterly earnings.
The UN Global Compact Board Program is unique in its focus and ability to support boards of directors to drive sustainability initiatives within their companies.
It is important to note that sustainability is not about philanthropy. It is about how a company makes money — a key strategy that builds on the company’s key competencies and should be integrated in its core activities and dialogue with stakeholders.
To be done successfully, sustainability must be embedded in board practices.
The license to operate for many companies is under pressure and a matter for the board. Boards do not want to incentivize risky and immoral behavior, but changes are happening so fast that the number of blind spots are multiplied every year.
Having corporate sustainability on the board agenda will help shine a light on the blind spots as well as the bright spots that many boards don’t recognize.
Material benefits aside, there is also a loftier goal associated with any board movement toward sustainability; they want to leave a legacy of making the right decisions.
In the end, board members owe it to themselves, their children and grandchildren to provide good stewardship of resources and capital. We all want to make our family proud and future generations happy, because nobody will talk about how much money we made when we are gone, but rather what we contributed to making the world a better place.
I am proud to be involved with the UN Global Compact Board Program as one of 12 global facilitators.
All facilitators, as well as the Global Compact LEAD team headed by Ole Hansen and Ingvild Soerensen, are ready to assist. These individuals are selected across a wide variety of industries, and each facilitator is chosen for expertise in sustainability and understanding of corporate governance in their region.