Although this report’s title focuses on the oversight and governance of corporate responsibility within the boardroom, the sub-plot throughout is really about leadership.
At a time when confidence in business and the markets is at a low which matches only the 1920’s, and which is exacerbated by a prolonged recession, the market needs business leaders who can balance an ever growing list of short term pressures with long term sustainable value creation. Leaders who understand that to gain the full benefits of a corporate responsibility strategy, it has to be at least back to back, if not completely integral, to their business strategy. And we know that this kind of leadership needs to be exercised in the boardroom as a whole, not just guided by one or two individuals.
Through my involvement in Business in the Community, I’m fortunate enough to have seen this kind of leadership at work in a number of organisations but, as this report highlights, it’s not a given across all major listed and non-listed companies in the UK. The report identifies various governance structures that have been established to create the necessary oversight to help bridge corporate responsibility and business strategy but despite these structures it concludes that not all boards appear to be organised for success, nor do they appear to see corporate responsibility and sustainability as a core business discipline, and many have yet to adopt what the report calls a Sustainability Mindset. This mindset is 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, a steward and an auditor, of management’s commitment to corporate responsibility and sustainability”.
The report also suggests that there may be a gap in the skills and experience needed by some board members to be able to contribute to material deliberations in this arena. So the report proposes a shift in thinking and makes a number of recommendations to address this gap. My hope is that member companies of Business in the Community will take the lead in adopting these recommendations and thus encourage all to create companies that are economically, socially and environmentally sustainable.
Phil Hodkinson, non-executive director, BT, Resolution and Travelex
“The Best practice governance model is a way of ensuring there’s a framework that delivers sustainability. Fundamentally, governance is about sustainability. It’s about this balance between profitable growth and wealth creation, environment impact and your impact on society. That is why governance exists, to my mind. But that might be a very holistic view of it all, because I don’t think the right thing is just to focus on performance. A focus on performance does not make for sustainable enterprise if performance is just about profitability.” Paul Drechsler, Chairman and Chief Executive of Wates, and Senior Independent Non-Executive Director, Filtrona
