A sustainability checklist for boards of directors

Whether you’re just getting started on your corporate sustainability journey, re-prioritising now, or in the middle of strategising and need a fresh glance at underlying goals, this checklist will help.

Two reasons: 

• It’s a crucial topic to the modern stakeholder (including investors, consumers, employees and regulators) – usually falling under the heading of ESG (environment, social and governance)
• It’s a vast topic. You might think it starts and ends with the environment or climate change, but that’s only part of the story. True sustainability stretches further and involves many different contexts. 

Boards of directors play a crucial role in ensuring sustainability is hardwired into company strategy. They must ensure it facilitates ethical principles, national and global duties, and long-term profitability. Here’s a checklist that every director should keep in mind regarding sustainability.

First of all, get clear on where your company stands:

Where is your company now, and where does it want to be? If nothing else, this builds you a launch pad to craft a successful sustainability strategy. When you do this, consider stakeholder, regulator, and shareholder expectations.

Decide on a person – or committee – from within the board of directors who is responsible for overseeing sustainability strategy. Above all these, this person or team should ensure that the drive for sustainability aligns with the company’s mission and values. 

Sustainability should tie a company together, not fracture it.

If you realise that you need more expertise on your board to manage sustainability, don’t worry. That’s common. 

The key to meeting this challenge is training – even people as senior as board members can benefit from it, especially when sustainability and ESG are still a new area for many of us. 

Explore your training options today.

Identify and mitigate sustainability-related risks that could impact the company’s reputation, operations, or financial performance. Dig deep when you need to. Risk management often requires a thorough examination to get right.

Once you’re clear on where you need to go, start thinking about how you’ll get there. Here are some essential components of sustainability strategy you should keep in mind:

This is crucial. Without stakeholder involvement, the best sustainability strategies can fall spectacularly flat. Engagement means constant communication of your sustainability goals and progress to everyone, including employees, customers, suppliers, and communities. 

Effective communication lets these groups know why decisions have been made, their responsibilities, and what benefits they can expect.

In many cases, this is an extension of point 4. Engaging with stakeholders often requires transparent, up-to-date and honest reporting – on challenges as well as successes.

Your board should consistently assess the company’s environmental footprint, including emissions, resource consumption, and waste generation. Quantify this as far as you can. Most environmental impact and climate impacts can be demonstrated with clear metrics.

Pay close attention if you’re in an industry heavily dependent on supply chains. Your board needs to assess and improve the sustainability practices of suppliers and partners to minimise environmental and social risks within the supply chain.

How are you managing waste? Are things like electricity and space use as efficient as they can be?

This has two parts. The first deals with how much of your company’s energy is renewable. The second concerns whether your company is part of the voice calling for more renewable energy. If you did this, might it complement your sustainability strategy?

If your primary industry is manufacturing, how long will your products last? If the answer is that they may not last long, even though they could with the right processes, you might have some thinking to do here.

More and more, we are seeing that diverse boards and workforces make for a more sustainable company. They represent stakeholders much better while appealing to a broader pool of investors. Is your company promoting thinking about diversity regarding recruitment and retention?

Companies that don’t look after their workforces risk having higher turnover rates and great financial unpredictability. None of this spells sustainability. For that reason, it’s important to consider programmes that focus on employee health, safety, and enjoyment. This boosts morale and encourages a sense of community.

Your board should closely examine the communities surrounding offices, factories, and other sites of operation. Are these communities happy with you being there? If not, or you don’t know, consider that a wake-up call. Hostile communities are a threat to corporate sustainability.