Do many companies like to just show-off by displaying interest in the environment or social or human rights subjects? Alternatively, do these companies really realize that these issues influence people’s lives and the future of our planet, as well as their own viability?
According to the book, “A Better World, Inc.: How Companies Profit by Solving Global Problems… Where Governments cannot” (Palgrave Macmillan, 2014), there are three fundamental questions to define when a company is serious about sustainability.
Core Question #1: Is the Board Organized to Address Sustainability?
In companies, only the board of directors has the legal responsibility to guarantee the company’s success. However, they can face many risks like high costs of fossil fuels, labor conflicts and the absence of qualified workers for high technology jobs. In order to make the most of shareholder value, the board must be prepared to address the company’s sustainability plan.
Therefore, the board should have a committee concentrated on sustainability issues, with its members having relevant experience and expertise. Moreover, the board of directors should include people coming from diverse backgrounds and having perspectives, experience and expertise from emerging markets.
Core Question #2: How well does the company engage with valuable NGO/nonprofit partners on sustainability matters?
To get the maximum of success of their sustainability efforts, companies should be collaborating with NGOs. Companies offer valuable resources to achieve social, environmental and economic impacts while they gain a lot by accessing and grasping the expertise and credibility of some NGOs for specific initiatives and programs within these companies overall sustainability strategy.
In order for a company to be able to know if it engages with valuable NGO in meaningful relationships, it should check for the quality and credibility of the NGO and learn about the organization’s mission and work, board members and their key sources of revenue. It should also recognize how meaningful is the relationship between the company and the NGO and what the impact of their joint efforts.
Core Question #3: How well does the company engage with stakeholders?
To guarantee an effective sustainability of a program, a company should engage with many investors in significant discussions about this company’s decisions that will have social, environmental, and economic impacts. For example, these discussions could be the sourcing of natural resources from a particular geographic location, the pricing of a product that will influence a segment of the community or the creation of a new product to address a social or environmental challenge.
Since there are a variety of shareholder and investor groups, and many kinds of engagements, it becomes more and more difficult for a company to discern its commitment with its stakeholders. Nevertheless, companies can still have the means to evaluate their engagements by having a Stakeholder Advisory Council and having a social media presence and also by participating in organizations such as the Global Reporting Initiative and the IIRC that help facilitate accountability and disclosure for social and environmental impacts.