Engagement with management
The role of the board director is in an oversight capacity, it is therefore important for the board to engage with management to ensure that the day-to-day running of the business is aligned with the long-term strategic objectives of the organization, and the company purpose.
The board principally get their information from management, and management know the business better than anyone so the board should see that it understands and engages with management on topics that they may be less familiar with. The board should also challenge management where it does not feel they are taking all appropriate ESG matters into account in the daily running of the business as well as taking the opportunity to understand and learn from them on key areas of focus for the organization. Engaging with management is a chance for board directors to better understand the potential impact of ESG matters on the business, as well as gain expertise on some of the more systemic challenges.
“‘The challenge when it comes to looking at ESG is that there are some issues that are more comfortable for boards because they fit more neatly within what would be considered good operational practice or good housekeeping… where it gets much more difficult is in areas such as climate change or human rights or issues where the level of control that the company has over the issue is heavily diluted”
Questions to the Board
We have collated a series of questions for both board directors and executive management, designed to be used as prompts for discussion. The questions are intended to help organizations further integrate environmental and social considerations into the existing governance arrangements and decision-making processes within the organization.
There are a series of questions for the board to ask itself or consider in boardroom discussions to ensure the considerations are embedded in the business operations. Download the questions using the link below.
SAP Global has engaged with their Managing Board and senior executives by establishing a Sustainability Advisory Panel, comprised of a diverse group of international stakeholders, to discuss how sustainability can be better embedded in SAP’s core business. Their governance framework outlines the responsibilities over sustainability for board members and the leadership team and the regional operational sustainability networks. Their framework also outlines clear reporting lines in which the Vice President of Sustainability provides clear and frequent reports directly to the CEO
Acciona describe their management approach to material issues in their Sustainability Report 2018. It discusses their data collection process, internal controls and audits for various material issues. Acciona includes evidence of upstream engagement through disclosure on supplier training, audits and due diligence. It also describes training activities on human rights, workplace inequality and environmental issues for employees and engagement with customers on health and safety and product labelling. There is strong evidence of how sustainability is integrated into operations through discussion of internal carbon pricing and procurement procedures, among other topics.
We have curated a list of resources that may be useful to board directors, this is not intended to be an exhaustive list, but rather an example of further reading that can be done to enhance board awareness of key environmental, social and governance considerations.
If there are any resources that you think are missing, or that we should refer to, please do not hesitate to email us.
UN Global Compact
Accounting for Sustainability
PRI and UN Global Compact