The board’s role in sustainability strategy
Connect material sustainability risks to strategy, oversight and decision-useful reporting without blurring management responsibilities.
Facultas Advisory · Originally published
Revised edition
Connect sustainability to the business
The board should examine how material sustainability risks and opportunities affect strategy and resilience. The relevant issues differ by business model, exposures and time horizon. A list of initiatives is not a substitute for a clear account of their business implications.
Distinguish oversight from execution
Management develops and implements plans; the board challenges their assumptions, oversees progress and considers whether resources and risk appetite are aligned. Committee responsibilities should be explicit, with a clear route for issues that require the full board’s attention.
Ask for decision-useful evidence
Which exposures matter most? Are targets supported by credible plans, owners and resources? How reliable are the indicators? What trade-offs or uncertainties should change the decision? Reporting should make gaps and setbacks visible alongside progress.
Apply the right framework
The G20/OECD Principles provide governance guidance on sustainability and resilience. They are not a substitute for the duties and requirements applicable to a particular board. Avoid assuming that one statement about stakeholder interests defines directors’ obligations in every jurisdiction.
Reference
G20/OECD — Sustainability and resilience (opens in a new tab)
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