About the report
This is a joint report by the Doughty Centre for Corporate Responsibility, Cranfield School of Management and Business in the Community (BITC). It is both a summary of quantitative and qualitative research of FTSE 100 companies and companies completing BITC’s CR Index undertaken during 2012 and a think-piece inviting discussion and debate amongst corporate boards about how to improve oversight and governance in future.
Our research suggests that most large, UK-headquartered companies do now have some form of board oversight of their commitment to corporate responsibility and sustainability.
The report identifies a number of different models;
a formal, dedicated CR /sustainability (or similarly titled) committee of the board consisting exclusively of board members;
a mixed CR committee – which includes at least one Board member, as well as senior executives who are not board members;
reserved - where issues of corporate responsibility and sustainability are addressed by the board as a whole, and there is no delegation to a board committee;
Lead Board Member(s) – one or more board members are publicly designated as the lead director for CR and sustainability or for a particular aspect;
a Below-board CR Committee which includes only non-Board members;
or an explicit extension of the remit of an existing committee of the Board.
In practice some companies employ several of these models simultaneously. A significant number of boards are now assisted by panels of sustainability experts and / or by stakeholder advisory groups.
Our qualitative research suggests that corporate responsibility and sustainability leadership and stewardship currently tends to come from the chairman or CEO or another board member, rather than yet being a collective mind-set of the board as a whole.
With the increasing importance of corporate responsibility and sustainability for companies, boards may wish to consider the implications for their Board Skills Matrix (Generic and Specific); and for the recruitment, induction, continuous professional development and appraisal of directors.
The Sustainability Mindset
For many companies and boards, however, there is still a critical mind-set shift that has to occur. Specifically, the shift from the idea of boards as mentors or monitors, stewards or auditors, to mentors and monitors, stewards and auditors of sustainability.
And a second shift from the idea of sustainability as being about risk mitigation to the recognition that to be truly embedded, it has to become both risk mitigation and opportunity maximization.
The board sustainability mindset, therefore, can be defined as: A collectively held view that long-term value-creation requires the company to embrace the risks and opportunities of sustainable development; and that the board is simultaneously a mentor and monitor, steward and auditor of the management in their commitment to corporate responsibility and sustainability.
The central recommendation of the report is that individual boards need to assess whether they have a ‘Sustainability Mindset’ and, if not, identify how to create one.
Further recommendations cover periodic reviews of governance models used; the Board Skills Matrix; incorporating sustainability in search briefs for new board members, induction, Continuous Professional Development and board appraisals; and contributing to follow-up studies to elicit further and more in-depth good practice examples.
The report also includes a “Twenty Questions” checklist for directors and suggestions for Company Secretaries.