Laura Sanderson co-leads the Board and CEO Advisory Partners in Europe and Sarah Galloway is co-head of the Global Sustainability Practice at Russell Reynolds Associates. This post is based on a Russell Reynolds Associates memorandum by Ms. Sanderson, Ms. Galloway, Louise Belloin, Molly Conte, Beth Hawley, and Emily Meneer. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here) and Does Enlightened Shareholder Value Add Value? (discussed on the Forum here) both by Lucian A. Bebchuk and Roberto Tallarita; Restoration: The Role Stakeholder Governance Must Play in Recreating a Fair and Sustainable American Economy—A Reply to Professor Rock (discussed on the Forum here) by Leo E. Strine, Jr.; Stakeholder Capitalism in the Time of Covid (discussed on the Forum here) by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita; and Corporate Purpose and Corporate Competition (discussed on the Forum here) by Mark J. Roe.
The business case for sustainability has never been stronger
Organizations are under increasing pressure to create holistic approaches to sustainability and broader Environmental, Social and Governance (ESG) strategies to meet regulatory requirements and societal and investor expectations. At the same time, sustainability also presents an enormous opportunity for value creation to those that develop more sustainable products or solutions.
Russell Reynolds Associates examined the role boards can play in activating sustainability across their organization, setting out:
- The importance of forging a collaborative relationship with the management team
- The four key areas of board responsibility when it comes to sustainability
- Actionable recommendations and examples of implementing effective sustainability oversight
An increasing number of companies are in the process of transforming their business and operating models to deliver sustainable value to their customers, employees, investors, and the wider societal context in which they operate. However, most boards and management teams are struggling with this transition.
Activating sustainable leadership requires a high degree of coordination, starting with the board and senior leadership becoming aligned on the sustainability vision and roadmap, and allowing next-generation leaders and front-line employees to become conduits for embedding the sustainability agenda into the fabric of the organization. This results in more unified messaging when interfacing with customers, suppliers, and other external stakeholders.