In the second part of a series on boards addressing ESG matters, Denise Kuprionis and Pamela Styles suggest ways governance teams can work to make sure their board is on track.
1. Be the leader. Explain to your colleagues that sustainability must be on the agenda. A good way to get out in front as a leader is to publish formal board ESG policies and describe your committee oversight structure.
2. Focus on what sustainability means at your company. Narrow your ESG definition down to something substantive and workable. Encourage management to facilitate in-depth discussion about how ESG is incorporated into your strategic planning.
3. Ask for briefs on ESG-related industry developments. Learn what your peers are doing about ESG. Monitor hot topics. Track ESG-related shareholder proposals leaping from one sector to the next.
4. Insist sustainability strategy and execution is co-ordinated to avoid ineffective leadership silos. Raise the general level of ESG familiarity across the organization to empower your employees’ collective understanding and collaboration.
5. Consider how positive ESG attention could generate revenue growth. Prioritize ESG efforts that can have a material impact on top and bottom lines. Focus on addressing your customer’s ESG interests first (retail and B2B supply chain).
6. Understand the source of negative activism. But don’t prostrate your sustainability program or public positioning just to appease activists.
7. Know your stakeholders and ensure a balanced perspective. Understand who in the company’s circle of friends, alliances and competitors cares about ESG, why they care and what they think is most important. Ask who doesn’t care and why.
8. Create a chief sustainability officer position. More companies are creating an executive officer position to ensure all the ESG/sustainability-related efforts are co-ordinated to an overarching strategic plan.
9. Define sustainability as a strategic pillar of your company. Elevate sustainability to full status in your annual strategic planning reviews.
10. Review your sustainability disclosures. Ask if the company is effectively communicating the rationale for its sustainability choices to stakeholders. Review and update the disclosures regularly.
Denise Kuprionis is founder and president of the Governance Solutions Group and Pamela Styles is founder and principal of Next Level Investor Relations