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The Conference Board

Sustainability

U.S. Boards of Directors Often Fail to Take Charge of Corporate Sustainability

Boards face knowledge gap about designing and overseeing a companywide program

Published: Monday, December 5, 2011 - 14:07

Leaders of U.S. publicly-traded companies are becoming increasingly aware that their access to capital and ability to implement a long-term business strategy depend on support from multiple stakeholders. However, when it comes to social and environmental matters, boards often face a knowledge gap that can impair the performance of its oversight responsibility, according to a new report by The Conference Board.

Sustainability Matters: Why and How Corporate Boards Should Become Involved” (Report No. 1481-11-RR, The Conference Board) was developed in collaboration with a team of experts in the field to provide guidance to directors approaching the task of sustainability oversight.

“Today, more than ever, corporate sustainability has risen to the status of strategic business matter and demands supervision from the top,” says Matteo Tonello, executive director of corporate leadership at The Conference Board and editor of the report. “However, despite the extensive body of literature available on corporate governance and sustainability as separate areas of research, minimal attention has been paid to the interaction between the two. In particular, there is limited knowledge of the role that should be performed by the board of directors in designing, endorsing, and overseeing the implementation of a corporate sustainability program.”

The report highlights a series of issues for a pragmatic boardroom discussion on the subject, including:
• How to articulate the business case for embarking on sustainability initiatives, which have tremendous potential bottom-line benefits
• How to benefit from the legal protection offered to corporate directors making socially outward-looking business decisions
• How to conduct a stakeholder-value analysis and use its outcome to design a sustainability strategy
• How to develop a coherent set of metrics to evaluate the progress made by the company toward such goals, and weave such metrics into the company’s top executive compensation policy
• How to communicate a sustainability strategy to employees and the market, while avoiding common missteps that could damage corporate reputation
• How to integrate philanthropy into the corporate sustainability program

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The Conference Board

For more than 90 years, The Conference Board has created and disseminated knowledge about management and the marketplace to help businesses strengthen their performance and better serve society. The Conference Board operates as a global independent membership organization working in the public interest. It publishes information and analysis, makes economics-based forecasts and assesses trends, and facilitates learning by creating dynamic communities of interest that bring together senior executives from around the world.Headquartered in New York, New York, The Conference Board has additional offices in Belgium, Singapore, Hong Kong, Beijing, Ottawa, and East Mumbai, India.