background image

Navigating the sustainability shift (II/II): the role of board leadership in a changing corporate landscape

author image

By Alex Hong

· 11 min read


Collaboration between boards and management

The amicable partnership between the board of directors and the management team emerges as a key to success in the quest for sustainable and regenerative business models. This article emphasises the crucial importance of good collaboration between these two pillars of corporate leadership, as well as examples of successful collaborations that have propelled sustainability programmes to new heights.

The need for effective collaboration

Effective collaboration between boards and management is imperative for several reasons:

  • Alignment of vision: The board of directors establishes the company's strategic vision, while management implements it. Collaboration ensures that sustainability objectives are woven throughout the company fabric from top to bottom.
  • Holistic decision-making: Collaboration promotes holistic decision-making that takes into consideration financial, environmental, social, and governance factors. It reduces the possibility of sustainability actions being considered in isolation.
  • Resource mobilization: The board's supervision responsibilities include resource allocation. Collaborative decision-making ensures that resources are allocated to sustainability efforts in the most effective way possible.

Examples of successful partnerships

  1. Unilever: Unilever is an excellent example of board-management collaboration in sustainability. The board established lofty sustainability targets, such as the Sustainable Living Plan, with the purpose of improving health and well-being, lowering environmental impact, and improving livelihoods. These objectives were met by the management team, resulting in substantial progress and recognition as a sustainability leader.
  2. Interface: Interface, a carpet producer, has proved the value of collaboration in developing sustainability innovation. Ray Anderson, the company's creator, changed the board's perspective, resulting in a commitment to become a restorative organisation. The board's and management's partnership resulted in ground-breaking sustainability initiatives, such as Mission Zero, which intended to remove any negative environmental impact.
  3. IKEA: IKEA's journey to sustainability exemplifies a dynamic collaboration between the board and management. The board of directors made a commitment to sustainability by investing in renewable energy, responsible sourcing, and circular economy practises. The management team turned this idea into reality, propelling IKEA to the forefront of sustainable home furnishings.

These examples demonstrate that effective board-management collaboration entails establishing visionary goals, aligning interests, and ensuring that sustainability is integrated into all aspects of a company's operations. It also supports my ongoing call towards coordinated collaboration because it can create the multiplier and binding force that most corporations need to accelerate their sustainability or regenerative pivot. 

Impact on sustainability goals

The impact of effective collaboration between boards and management on sustainability goals is profound:

  • Alignment and execution: Collaborative leadership ensures that sustainability objectives are aligned with business strategy and are effectively implemented.
  • Innovation: Collaboration promotes creativity since different points of view contribute to innovative solutions to sustainability concerns.
  • Stakeholder trust: Stakeholder confidence is increased when a commitment to sustainability is demonstrated via joint action, attracting conscious consumers and investors. Constant coordinated efforts can also lead to an increase in trust and hence be that multiplier and bind effect that accelerates our pivot.

Coordinated collaboration between boards of directors and management is critical to creating sustainable and regenerative business models. Successful collaborations, such as those with Unilever, Interface, and IKEA, show that when boards and management work together, they can achieve revolutionary change that benefits not only the company but also society and the globe.

Leadership roles

The transition to sustainable and regenerative business models necessitates a delicate tango of leadership positions. In this article, we look at the many roles of corporate leadership, distinguishing directors as stewards, boards as custodians, and management as implementers. We look at how these positions interact to drive sustainability activities and create a more sustainable future.

The roles defined

  1. Directors as stewards: Stewardship is performed by directors, who are frequently board members. They are tasked with protecting the company's long-term interests, particularly its environmental goals. Stewards determine the principles and ethical compass, as well as providing oversight.
  2. Boards as custodians: Boards operate as caretakers of the company's well-being jointly. They are in charge of ensuring that the firm performs in an ethical, transparent, and consistent manner with its stated principles. Boards set the tone for governance and oversee management's strategy execution.
  3. Management team as implementers: The management team, led by the CEO, is in charge of putting the board's vision into action. They convert strategic objectives into executable strategies, assign resources, and carry out activities. Management is on the front lines of implementing sustainability.

Interplay of roles

The synergy of these roles is pivotal in advancing sustainability:

  • Visionary leadership: Directors, as stewards, chart the course for long-term viability. They establish the goals and values that support long-term strategy.
  • Governance oversight: As custodians, boards provide governance supervision. They make certain that sustainability practises are in accordance with ethical standards and legislative regulations.
  • Execution and Innovation: The management team, as implementers, is in charge of turning the idea into reality. They drive innovation and put environmental efforts into action.

Driving sustainability initiatives

The interplay of these roles drives sustainability initiatives forward:

  • Alignment: The sustainability vision is set by the directors, and the boards support it. This coordination ensures that sustainability is a strategic imperative.
  • Accountability: Boards hold management accountable for implementing sustainability. They keep track on development and demand openness.
  • Innovation: The management team innovates and creates long-term practises. They mobilise the necessary resources and capabilities for implementation.
  • Feedback loop: Communication between these jobs generates a feedback loop that ensures that sustainability initiatives are continuously improved.

Impact on sustainable leadership

The collaborative interplay of leadership roles has a profound impact on sustainable leadership:

  • Ethical foundations: Directors and boards lay the ethical groundwork for long-term success, establishing trust among stakeholders.
  • Strategic direction: Stewards and custodians define the strategic sustainability direction, ensuring alignment with the company's purpose.
  • Operational excellence: Implementers drive operational excellence in sustainable implementation, resulting in measurable results.
  • Resilience: The interaction of roles facilitates sustainable leadership, which improves organisational resilience in a quickly changing world.

The dance of leadership positions - directors as stewards, boards as custodians, and management as implementers - is the foundation of long-term corporate governance. They work together to build a symphony of vision, values, and execution to promote sustainability and construct a regenerative future.

Impact on organizational culture

The commitment of the board of directors to sustainability has a significant impact on the overall organisational culture. This essay delves into the complexities of how board leadership's commitment to sustainability influences company culture. We also highlight the multiple advantages of building a sustainability-driven culture.

Board leadership's influence

Board leadership sets the tone and direction for the entire organization:

  • Visionary leadership: Boards define the strategic vision and values that underpin sustainability efforts. Their commitment to these principles sends a clear message to all employees.
  • Governance oversight: Boards oversee ethical practices and regulatory compliance, ensuring that sustainability is embedded in the company's DNA.

Transforming organizational culture

The impact of board leadership on organizational culture is multifaceted:

  • Ethical compass: Commitment to sustainability creates an ethical compass that guides decision-making at all levels. Employees are empowered to make choices that align with sustainability principles.
  • External reputation: A sustainability-driven culture enhances the company's external reputation, attracting like-minded partners, customers, and stakeholders.
  • Engagement and pride: A sustainability-driven culture engages employees. When they see the company's commitment to societal and environmental well-being, they take pride in their work.
  • Innovation and creativity: Sustainability fosters innovation as employees seek creative solutions to sustainability challenges. A culture that encourages this innovation leads to continuous improvement.

Benefits of a sustainability-driven culture

The advantages of fostering a sustainability-driven culture are profound:

  • Employee retention: Companies with strong sustainability cultures tend to retain employees longer. A sense of purpose and alignment with values reduce turnover.
  • Enhanced brand reputation: A commitment to sustainability enhances brand reputation, attracting conscious consumers and investors.
  • Resilience: Sustainability-driven cultures are more adaptable and resilient in the face of changing market dynamics and crises.
  • Innovation hub: A culture of sustainability becomes an innovation hub, driving the development of sustainable products and practices.
  • Stakeholder trust: A culture rooted in sustainability builds trust among stakeholders, leading to stronger partnerships and support.

The ripple effect

The commitment of board leadership to sustainability sends ripples throughout the organization:

  • Long-term focus: Organizations with strong sustainability cultures prioritize long-term value creation over short-term gains.
  • Alignment: Employees at all levels align their actions with sustainability goals.
  • Inclusivity: Sustainability-driven cultures often promote diversity and inclusivity, recognizing the interconnectedness of societal and environmental well-being.

The commitment of board leadership to sustainability acts as a catalyst for cultural reform within organisations. Fostering a sustainable culture benefits not only the organization, but also society and the world. It fosters a harmonic ecology in which ideals, actions, and impact all work together to generate a regenerative future.

When asked about the influence of the board on corporate direction and culture, Shai Ganu, Governing Council; Chair of ESG Committee, Singapore Institute of Directors commented that the board, and in particular the remuneration and nomination committees, serve as the custodians of corporate culture - because they determine who gets promoted, what behaviours are valued, and what performance gets rewarded.

The way forward: accelerating sustainability

Looking ahead, the clear call for board leadership is evident. The road ahead necessitates quick action, adaptable strategies, and unwavering devotion. The time to act is now, and the compass is in the hands of board leadership.

A pivotal role

The way forward involves several key imperatives:

  • Strategic agility: Board leadership must be strategic in their approach, quickly adjusting to the changing landscape of sustainability problems and opportunity.
  • Innovation incubators: Boards should foster an innovation culture in which sustainability solutions are nurtured, tested, and scaled.
  • Stakeholder Engagement: Actively involving stakeholders, from investors to employees to communities, will increase the effect of sustainability projects.
  • Global/regional collaboration: Recognising the importance of global collaboration and partnerships in addressing systemic issues, boards should seek global collaboration and partnerships.

Data-driven decisions

Board leadership should embrace data-driven decision-making:

  • Metrics for progress: Use sustainable measurements and data to track progress, create goals, and publicly report accomplishments.
  • Risk assessment: Environmental and social concerns must be properly assessed and factored into decision-making processes.
  • Economic case: Understand the economic case for sustainability, recognising that it is an investment in resilience and longevity rather than an expense.
  • Sustainable IT: Appreciate that business functions as well as sustainability efforts are made possible by IT and the application of AI. How organisation understand and operate with sustainable IT in mind will be critical for the future. 

On the topic of Sustainable IT, Dr Nilandri, the President of the Green Computing Foundation, commented that while the heart may steer the ship, it is data that charts the course toward sustainability. He went on to say that data-driven decision-making by boards on sustainability is not just a choice; it's an imperative for organizations committed to a resilient and responsible future. 

Dr Niladri added, “The biggest challenge today is the lack of Sustainability related data and more so in the Scope 3 area. This is leading to misleading reports. Thus, we see very little progress as we cannot measure due to lack of data. The Board has the Sustainability Objectives and these need to cascade down to the execution level for each Business Process. OKR is a good way to define and monitor performance on Sustainability. This will require data. This is where IT needs to enable Sustainability in Business by providing the data from every business process automation that is there and beyond. This requires an ecosystem of different organizations in different domains, and different geographies to collect the Scope 2 and 3 data. This requires a Data Platform with proper data Security and Governance. Thus, the Board has to look beyond their own organizations for proper Sustainable Practice and have to use IT for enablement.”

Conclusion

Board leadership is at the helm of an epochal journey towards sustainable and regenerative business models. We looked at the obstacles, evolution, stakeholder viewpoints, and the crucial importance of a holistic ESG framework. Boards as custodians, directors as stewards, and management as implementers collaborate to create a sustainable future.

Board leadership shapes not only the prosperity of organizations, but also the well-being of our planet and societies as stewards of corporate destiny. Board leadership can lead us to a future where businesses succeed while harmonising with the world around them by adopting sustainability as a strategic objective, cultivating a culture of responsibility, and acting decisively.

The time has come for board leadership to act. Sustainability is no longer an option; it is a need. Take advantage of this opportunity to embark on a journey towards a more egalitarian, affluent, and sustainable world. We can reshape the future of business together, one boardroom at a time.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

Did you enjoy this illuminem voice? Support us by sharing this article!
author photo

About the author

Alex Hong is the Executive Director of Digipulse Data and strategic advisor. He is the Chief Sustainability Coordinator of the Youth Networking Business Committee (YNBC). Alex is LinkedIn’s Top Voices (Green) in Singapore 2022 and represents the Global Blockchain Business Council (GBBC) as the Ambassador of Southeast Asia.

Other illuminem Voices


Related Posts


You cannot miss it!

Weekly. Free. Your Top 10 Sustainability & Energy Posts.

You can unsubscribe at any time (read our privacy policy)