On Companies’ Holiday Wish List: Board Involvement in Sustainability Efforts

Most companies need — and want — senior-level involvement in sustainability. Most don’t have it.

According to new research carried out by MIT Sloan Management Review, the Boston Consulting Group, and the United Nations Global Compact (UNGC), organizations need and want the involvement of boards of directors in their sustainability efforts — but don’t yet have it. A significant majority (87%) of respondents to our sixth annual Sustainability and Innovation survey agreed that boards should play a strong role, but only 42% reported that their boards actually were engaged on this topic.

These and other findings were presented at a UNGC symposium held on November 20, 2014 at UN headquarters in New York. David Kiron, executive editor of MIT SMR’s Big Ideas Initiative, and Knut Haanaes, partner and managing director of The Boston Consulting Group, were the lunchtime speakers at the annual event.

During the day, participants were challenged to envision what the sustainability-focused corporation in the future might look like, and to identify its key characteristics. While two of the day’s speakers had a healthy disagreement about the role of companies in solving the world’s sustainability problems, attendees did agree on one thing: getting full support at the highest levels of governance in corporations is critical.

Joel Bakan, law professor and author of the book and documentary film “The Corporation,” and L. Hunter Lovins, author, consultant and professor of sustainability, differed in their vision of what corporations could do. Bakan believes that corporations are not designed to take leadership roles on social and environmental issues, and should not be relied upon to do so. But when Lovins asked who in the audience believed that government could be relied upon to solve the world’s big problems, not one hand was raised.

Board Commitment Necessary

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Lovins believes that forward-thinking companies realize that “you cannot do business on a dead planet. … The future of the corporation will be corporate leaders who have the guts to do what is needed.” And when the issue of short-term shareholder pressure was raised, she turned the problem around, challenging companies to “find better investors!”

The symposium also marked the launch of the UNGC’s Board Program, aimed at helping move sustainability issues “from the back room to the boardroom” by supporting boards of directors’ ability to take a more strategic approach to sustainability.

Board Engagement Can Be Higher

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“In order to move towards more inclusive and sustainable markets, there must be full ownership and oversight at the highest levels of corporate governance and decision-making,” said Georg Kell, UNGC’s executive director. “Boards of Directors are uniquely positioned to ensure the long-term viability of the business and to recruit and create the right incentives for the next generation of business leaders. Our goal is to put sustainability on both the CEO and Board agendas like never before.”

The gap between ambition and execution from a governance standpoint is just one aspect of sustainability explored in the new report, due out next month from MIT SMR, in collaboration with BCG and the UNGC.