Three Main Weaknesses in Corporate Sustainability Governance

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Three Main Weaknesses in Corporate Sustainability Governance
Anneke Zwart, Student (University), Netherlands

Although leadership is critical in the design and implementation of Corporate Sustainability (CS) programs, many companies still lack knowledge on how the board of directors should behave in the oversight of these programs.
The Conference Board Center for Sustainability studied how companies generally approach the oversight of CS programs and found out that there are 3 common weaknesses in CS approaches at the highest level:
1. No clear sustainability program structure: Usually, the responsibilities for overseeing CS programs are formally assigned to the board of directors. However, it seems to be the case that in many companies the real structure differs from the formal structure: Overseeing and implementing sustainability programs is often assigned to dedicated committees, or to a group of independent directors who are expected to be skilled in the field because of experience and background.
2. Lack of access to sufficient information: The main sources of knowledge concerning sustainability are internally created reports by senior executives. Other external and thereby independent sources that permit directors to critically evaluate and verify the information that is internally produced are rarely used.
3. Lack of operational instruments: Operational tools that are necessary for integrating a sustainability program into day-to-day activities of organizations are often lacking. Examples of such tools are as a vision statement; an appropriate link of compensation to performance on the sustainability program; a functional unit that has authority over implementing the sustainability program.
Source: Conference Board. “Sustainability Matters: Why and How Corporate Boards Should Become Involved.” Research Report R-1481-11-RR.



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