Organizational Placement and Governance of Sustainability

Many companies have been practicing sustainability for years and many more have begun to do so in the recent past. Despite all of the attention sustainability has received, the most effective way to integrate sustainability into other divisions within a company often remains unclear. Proper placement and governance are essential in order for a company to realize sustainability’s full value.

Sustainability most strongly affects three divisions: risk management, environment, and corporate planning/strategy. In order to maximize the impact of sustainability efforts, a company must:

  1. Define its goals for sustainability
  2. Determine under which division its goals will be served best
  3. Install a governance structure in that division and throughout the company that will enable the company to meet its goals

Key Details

  • Buy-in from the top is crucial to conduct a comprehensive and critical review of sustainability’s goals and organizational placement
  • Every company will have a different idea of what they want sustainability to accomplish and that the definition of that idea will drive sustainability’s placement and governance mechanisms
  • Governance must include metrics for ongoing measurement of how efforts are tracking to goals as well as associated corrective actions

Implications

  • “High sustainability” firms already outperform their peers, a trend which is expected to continue
  • As sustainability becomes better integrated into company operations and strategy, so too will sustainability metrics and results into company reports (e.g., annual reports)

More Information

UNEP: UNEPFI Integrated Governance

EY: Six Growing Trends in Corporate Sustainability

NBER: The Impact of Corporate Sustainability on Organizational Processes and Performance

This report is part of the Clean Tech & Sustainability Minute series. To view all featured Minutes, please click here.

Contributing Author: Gregg Liddick

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