Sustainability has become more than a trendy buzzword in business in the past few years as an increasing number of companies are putting it at the centre of their strategies.
Boards are waking up to the fact that there is more to a sustainably run business than eco-friendly behaviour. They are seeing the broader picture and shifting to a business model that takes more responsibility for all stakeholders—including employees and supply chains—and focuses on efficient, cost-effective operational strategies that can help boost the bottom line.
In the UN Global Compact–Accenture Strategy CEO Study carried out last year, 87% of global chief executives said the goals triggered a rethink on approaches to sustainability (see box, below). And nearly half (49%) agreed that the role of business was vital to achieving the UN goals.
Evolution of views
George Dallas, head of policy at the International Corporate Governance Network—led by investors responsible for more than $26trn of assets—points to an evolution in the way companies and investors view sustainability.
“In the past, sustainability was seen more as a separate CSR [corporate social responsibility] silo but now boardroom conversations are focusing on this,” he says.
Over the past decade a number of factors have driven the shift. Among these are environmental disasters, climate change, an increasing exposure of abuse of labour rights, particularly in supply chains, and inequality of opportunity, forcing companies to improve their governance and responsibility. “These issues can no longer be avoided,” Dallas says.
Public and investor anger at the controversial Dakota Access oil pipeline in the US with regard to violating human and environmental rights, and the scandal at Volkswagen, the German car maker caught cheating over diesel emissions, make sharp lessons for any board. The reputational damage that can follow malpractice and irresponsible behaviour is also pushing risk management to the top of the boardroom agenda.
This was originally published by Board Agenda.