As part of their fiduciary duty, Directors are obliged to assess risks and financial impacts of climate regulations, resource constraints, and proper labour practices. Shifting this boardroom view from matters of compliance to one of value generation and enterprise resilience is critical to moving into the realm of ‘High Performance’. Solutions to global challenges, food supply, energy security and transformative products and services will not happen through compliance alone.
What is High Performance Governance?
A high performance Board develops policies covering all sustainability issues that materially impact the company’s performance in tandem with the strategy for implementing these policies. These policies guide the company’s activities across its operations, the supply chain, logistics, the production line, the service delivery and the management of people and social capital.
Ultimately, High Performance Governance is about bringing new thinking into decision-making.
How are you tapping into your organisational knowledge?
Why should Directors and Senior Executives engage?
Capital investments have payback horizons that extend into a future where regulatory and resource constraints and sustainability concerns are going to be different from today. Is your leadership adjusting the rate of return? Are ESG (environmental, social and governance) considerations integrated into the criteria and decision-making processes that determine capital allocation for product research and development? Testing scenarios may reduce projected rate of return of projects with high environmental or social impact.
Companies should have mechanisms for the shareholders and employees to provide recommendations to the highest governance body as part of a best practice governance framework. Are the Company’s Directors providing the right kind of thinking to take the company to the next level of innovation?
What’s in it for the Board?
Sustainability Governance Framework: an internal audit and gap analysis, followed by recommendations for a governance system/framework including:
- Sustainability/ESG policy
- Sustainability working group/committee and champions
- Materiality and Boundary Assessment
- Integration into strategy, Charter, Code of Conduct, business plans and other relevant documents
- Structure for reporting, monitoring and delivering
Climate Change Governance Framework: our climate change governance structure includes:
- Board of directors and executive management engagement and oversight
- Public disclosure
- Emissions accounting/carbon management plan
- Strategic Planning, including incorporation into business operations, establishment of GHG reduction targets, and development and implementation of business strategies to reduce GHG emissions and to minimize exposure to regulatory, operational and other risks from climate change
- Stakeholder Engagement Models
- Materiality Matrix
Committee charters should spell out specific sustainability related responsibilities and accountability structures for both content and effectiveness of policies, and review the companies sustainability targets, strategy and performance, along with the adequacy of the company’s transparency on that performance. Communications with the most senior executive responsible for driving the company’s sustainability agenda must be regular, direct and relevant.
How do we do it?
- Round-table lunch sessions
- Committee workshop
- Team advisory (at all organisational levels required)
- Regular training and education on key sustainability issues, disclosure & transparency
- Knowledge Management
- Materiality Analysis