In her previous articles, Chartered Manager Eman Deabil (DipESG, PfMP, IPMO-P, SIP) has spoken extensively about the growing need to establish sustainable business practices in general. In her latest piece, she talks about sustainability in the boardroom in particular and the board of directors’ role in embracing a clear agenda and driving change from the top.novenove
I still remember the days, more than 10 years ago, when we were printing out hundreds of pages to prepare packs for the board of directors’ meeting in one of the organisations I worked for. It was a tedious non-value adding task, knowing that most of these packs will be shredded right after the meeting!
Thankfully, in that same organisation, we proposed buying tablet computers for the board members and the proposal was accepted. Yet to ensure that such proposal would be implemented successfully, we had to establish awareness and educate board members on the ‘why’ and ‘how’; ‘why’ we changed the status quo and switched to such practice (i.e. to save the environment), and ‘how’ they can leverage the new tools. Although at that time, sustainability was not receiving the same amount of attention it is receiving today!
In my previous articles, I spoke about the growing need to establish sustainability practices in general. Here, I will speak about sustainability in the boardroom in particular. Here is my advice for companies to lead change starting from the highest level.
1. The board should set a clear sustainability vision and strategy with clear objectives and targets, which wouldn’t be possible without conducting a thorough ‘materiality assessment’ to identify the key material topics that the organisation should focus on and address in its strategy. The same should be aligned with the organisation’s business strategy and should be communicated to all relevant stakeholders.
2. The board should establish a sustainability governance structure where roles and responsibilities are clearly defined. This may involve establishing a sustainability committee or appointing a Chief Sustainability Officer.
3. The board should look at all decisions through a sustainability lens. This may include considering the environmental, social and governance impacts of all major decisions (e.g. assessing credit applications taking sustainability into account, assessing investment decisions, etc.).
4. The board should ensure disclosing transparent, comprehensive and accurate sustainability performance; this may involve publishing a sustainability report or integrating sustainability metrics into the annual report.
5. Most importantly, the board should admit that ‘Sustainability’ is a new business dimension where lack of knowledge could hinder them from making the right decisions, so acquiring and building the required knowledge around it is key, the same should be established across the organisation.
In addition to these general best practices, there are a few specific things that boards can do to make their own meetings more sustainable, such as:
• Hold meetings electronically and make it the first preferred option whenever possible. This will reduce carbon emissions (commuting and travelling) and paper waste. It will also reduce the cost needed for holding board meetings (e.g. tickets, accommodation, food and beverages, etc.). Further, it will save all board members time, instead of consuming time to commute/travel, they can be present for the duration of the meeting only.
• Calculate the carbon emissions caused by board meetings, and then offset the carbon footprint of it. This can be done by planting trees or investing in renewable energy projects.
• Embrace digital means; especially the technologies that enable boards to improve their performance and governance; this may include smart TVs, smartphones, web conferencing, tablets, secure messaging tools and boardroom secured portals. Below are some examples:
o Board assessment tools enable a board to efficiently evaluate its own performance and that of its committees.
o Board portals: centralised and highly secure digital platforms that provide secure storage for sharing of board meeting documents such as corporate plans and budgets.
o Online collaboration tools: such as online whiteboards that can be used to conduct virtual brainstorming sessions.
o Digital voting tools that can be used to vote on major decisions.
o Meeting facilitation tools (AI enabled) that can take notes, document minutes of meetings, and actions agreed.
Having said the above, the board’s role is not limited to what’s stated above, as boards can play a leading role in making their organisations more sustainable. Not only by breaching about it, but by truly practicing its principles and ensuring that it’s reflected in the following – at minimum:
• Board Diversity: The diversity of directors’ skills and experience, the diversity of directors’ backgrounds, the number of female directors and the average age and experience of directors.
• Board Independence: The percentage of independent directors on the board, the number of committees chaired by independent directors and the independence of the board’s committees.
• Board Oversight: The frequency of board meetings, the number of hours spent by directors on board activities and the board’s review of key ESG risks and opportunities.
• Incentivised Pay: Are executives formally incentivised to perform on sustainability?
From the above, we can conclude that boards of directors have a critical role to play; they can be the driving force to enable and implement sustainability inside their organisations. Nevertheless, they must ensure that their organisations contribute and support a long-term sustainable value creation.
