How Irish boards can partner with sustainability leaders to drive strategy

A harmonious and reciprocal relationship between the board and the CSO can convert green strategy into action.

In brief

• Board directors are aware of the high cost of an ESG failure and if they engage strategically on key issues, they can make it a win-win for themselves as well as CSOs.
• Sustainability leaders need to be strategically positioned within the organisation, given clear KPIs, funding, reporting lines and a seat at the leadership table.
• Boards can encourage a close working relationship between the sustainability leader, finance function and audit committee.

For the business mission to align to the sustainability vision, Irish organisations need to have a Chief Sustainability Officer (CSO) or sustainability leader who can bring the environmental, social and governance (ESG) agenda from the fringe to the core.

Today, ESG is central to strategy as organisations and their boards focus on how they can create value through sustainability. At the heart of value-led sustainability is the sustainability lead or the Chief Sustainability Officer. CSOs are helping organisations understand why creating value from sustainability is an imperative by demonstrating its positive correlation with financial performance. The CSO is responsible for the preparation of the sustainability action plan, establishing the organisation’s level of sustainability maturity, determining which ESG areas to prioritise and helping to embed it into the business strategy. The CSO also needs to understand where the organisation’s vulnerabilities lie and put in place strategies to mitigate those risks.

The ESG agenda needs the full support of the board as well. Boards are required to support and provide oversight for their organisations around decarbonisation, reporting on key ESG metrics, and propose ways to manage ESG risk factors. For the Irish boards to respond to the ESG agenda and the “Green Recovery” from COVID-19, it is necessary for them to build a harmonious and reciprocal relationship with the CSO. Currently, it is an evolving relationship.

Six key questions for boards to deliberate on

Sustainability is now a definite part of the board agenda. As boards convert words and strategy into action, they need to reflect on ways to get ahead of regulations and drive concerted engagements within the organisation.

Here are six pertinent questions boards can ask of themselves and the management team.

Build a relationship of mutual trust and support

ESG, as an agenda, is a shared responsibility and can also be a shared failure for the board, the CSO and the rest of the management team. Board directors are aware of the high cost of an ESG failure and therefore if they engage strategically on key issues, they can make it a win-win for both.

Boards and CSOs can support each other in three ways by:

1. Prioritise the ESG agenda and learn from each other:

ESG strategy and an organisation’s overall strategy cannot be in separate watertight compartments. Neither can they be executed in isolation. The objectives need to be integrated. The board and the CSO must deliberate and agree on the organisation’s ESG risks and opportunities. They need to spend some quality time together on a regular basis.

Here are some actions both the board and the CSO can take to make it mutually beneficial:

2. Elevate and enable the CSO

With an eye on long-term growth strategy, CSOs need to be strategically positioned within the organisation. They need to be given clear KPIs, funding, reporting lines and a seat at the leadership table. CSOs can contribute better when the board helps them in their journey.

Here are some actions boards can take to enable the CSO:

These are important steps no doubt but currently some organisations are yet to move in this direction.

3. Develop robust processes for disclosing data

Boards have a key role to play in defining the transition plan for a net zero future. They can help organisations get ahead of regulation while waiting for sustainability reporting will start in 2025. And to do this in close collaboration with CSOs, board can take the following two steps: