2Sustain

Yesterday, we talked about Rebecca Henderson’s top four sustainability tips for business executives. But, given the reality of current economic pressures, what happens if executives are too pre-occupied with short-term financial concerns to give sustainability issues the attention they deserve? Can someone else man the rudder until the economic gale subsides? Two new reports suggest the answer to that question is “Yes.” Deloitte just released new survey results and a white paper, both of which underscore how corporate boards are becoming increasingly vital in oversight of initiatives involving corporate responsibility and sustainability (CR&S). There’s no doubt that companies today are under tremendous economic pressure. If executives are devoting their attention to short-term financial matters, it only makes sense that boards are going to have to step up to attend to longer-term concerns like CR&S.

The Director Corporate Responsibility, Sustainability and Climate Change Survey was conducted for Deloitte by Corporate Board Member magazine’s Director Research Panel. In August 2008, the group surveyed 220 directors at U.S. companies with $1 billion or more in revenue. Here are a few key findings:

• 79% of respondents have a strong or moderate understanding of the business risks associated with CR&S and climate change.

• 76% of the directors surveyed have a strong or moderate understanding of the business opportunities associated with CR&S and climate change.

• Almost one-half of directors think their boards and management are committed to addressing CR&S and climate change.

• One-half of directors think their companies’ response to CR&S is integrated into business strategy and risk management, while 41% report no such integration.

• 30% of directors reported that their companies have set goals for reducing greenhouse gas emissions; 59% reported no such commitment.

• Almost one-third of directors think there is growing investor interest in their companies’ response to climate change/business sustainability issues, while 39% do not think there is growing interest.

• 35% of directors see value in having an environmental audit — measuring greenhouse gas emissions and energy consumption.

• 37% of directors favor full-board oversight of CR&S, while another 37% indicated oversight should reside in existing board committees, such as risk committees (24%), governance committees (24%), strategy committees (22%) and audit committees (15%).

As a complement to the survey, Deloitte also released an excellent white paper, titled “The Responsible and Sustainable Board.” This report spells out not just why CR&S should be on your board’s radar screen, but also how you can use your core business to help define your CR&S approach. For instance, UPS made delivery route efficiency a key component of its sustainability platform. Banco Santander, Spain’s largest bank, developed a micro-credit lending program to farmers, female entrepreneurs and other disadvantaged groups in South America. The Japanese cosmetic company Shiseido established a “Social Beauty Care Center” that provides free skin care advice to the elderly and people with skin disorders, scars and birthmarks. These examples show how CR&S can support and enhance a company’s core business while also improving its reputation, demonstrating responsible practices, and quite possibly, boosting the bottom line.

“With CR&S, much is at stake,” the authors conclude. “Don’t let short-term uncertainty obscure the longer-term picture. The choices made now in this area will be felt by future generations.”