Board Oversight of Sustainability

The role of corporations and other business organizations in society has become a hotly debated issue that has attracted the attention of numerous participants in the political arena; however, until recently board members generally showed little interest in the debate and remained focused on their traditional role of maximizing shareholder value. It is now becoming clear that questions regarding the role of business are tied to essential strategic and operational sustainability-related issues that are critical to the discharge of directors' responsibilities with respect to setting the long-term strategy of their companies and which have attracted the attention of investors, consumers and other stakeholders upon which companies depend for their survival. A number of studies have confirmed that board oversight is one of the top drivers of a company's attention to sustainability, a result that is not surprising given that the board is uniquely situation within the organizational hierarchy to ensure that sustainability is integrated into the long-term business strategy and that due consideration is given to social and environmental trends that will impact the company's operations and the markets in which it operates. While CEOs may come and go, and short-term pressures will inevitably batter all companies at some point, the board can offer long-term leadership continuity on sustainability through its strategic planning decisions and succession planning for the CEO and other senior executives. Traditional notions of directors' fiduciary duties, which assumed primacy of shareholders' interests and maximizing shareholder value, are giving way to a model of directors' duties that gives due weight to the interests of stakeholders and this book is intended to provide directors and their professional advisors with a practical guide to board oversight of sustainability that covers drivers and business benefits of corporate sustainability, the framework for directors' adoption and oversight of sustainability, roles and activities of board committees and evaluation and improvement of sustainable governance processes.