Reinforce governance to be resilient
A large company, operating in 10 countries and with many years’ experience in understanding the links between its activities and the impacts around it, had been used to leading the business community with innovations and best practices in social and environmental areas, and also in being transparent about issues on which external help was needed.
It asked for help to analyse governance models of market leaders and recommendations to make the company more aligned with such leaders, and more resilient.
The board of directors wanted to know whether the executive team and governance bodies were well prepared to guide the company through the changing business context expected over the next few years, or whether, after many years of embedding sustainability as part of the business’s general operations, there was a risk of social and environmental aspects becoming part of the general management procedures and losing the link with business strategy.
How could they make the company more resilient?
After initial discussions, the company decided to create a forum (or council) to support the executive team and governance bodies in keeping a forward-looking approach to social-environmental-ethical aspects as part of their strategic planning and decision-making process. Before defining the scope, shape and constitution of this forum, they wanted answers to some questions.
After interviewing directors and board members to get an understanding of their perception of what was needed, three months of research was conducted on the governance structure of several companies.
Some of the questions asked were: how many sustainability-related committees are part of the governance structure? Do they have a formal link to the board of directors? Do they have independent members? How often do they meet?
The table below presents a snapshot of the results for some of the companies that were analysed.
|Does it have a sustainability committee (or similar)?||Is there a formal link to the board of directors?||Does it have independent/ external members?||Does it meet more than once a year?|
|Unilever||Yes*||Yes||Yes||Yes (4 times)|
Yes (2 times)
Only publicly available information was used to prepare this table (end of 2014).
(*) these companies have many governance bodies dedicated to sustainability-related topics. i.n.a = Information not available
A final recommendation was prepared on the forum’s composition, scope, modus operandi and relationship to the current governance structure. The recommendation included a dynamic format that would have a small core group with experience in those fields which the executives and board members considered critical. It also considered invited members, with specific expertise, who would be part of the forum when needed.
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Photo and text by Nelmara Arbex