What Will It Take to Be A Corporate Leader?
Posted by on December 10, 2019 at 2:16 PM
Reposted from Future500.org.
(Editor's Note: "CSR" means Corporate Social Responsibility and "ESG" means Environmental, Social, and Governance)
Stakeholder expectations are evolving faster than you can say “planetary boundary.” Here’s where corporate sustainability could be headed next.
Earlier this month, we hosted a group of senior corporate sustainability leaders in Portland for our bi-annual Corporate Working Group. At the two-day meeting, members of our Corporate Affinity Network exchanged insights with their peers on pressing sustainability trends and spoke candidly with the activists and funders that are advancing those trends.
One key question kept coming up in our conversations: What does corporate leadership look like today?
Remember the days when a CSR strategy was considered a pretty big deal? Now, against the backdrop of new global tipping points, hyper-transparency thanks to disruptive technologies, and increasing scrutiny of non-financial metrics, stakeholders are urging companies to think bigger. Companies might feel like stakeholders are moving the goalposts, but activists, advocates, employees, and investors are calling on companies to accelerate their continuous improvement.
Get your story straight
What participants said: We’re hearing increasing calls to withdraw from organizations that aren’t aligned with our corporate sustainability goals.
Stakeholders want companies to walk away from industry groups and lobbying coalitions working at cross purposes with their climate statements and goals. In September, a group of 200 institutional investors called on 47 of the largest publicly traded U.S. companies to align their political advocacy with the goals of the Paris Agreement. A month later, in an open letter in the New York Times, 11 environmental groups urged companies to flex their lobbying muscles for climate action, ditch trade associations that aren’t in sync with their climate goals, and “allocate advocacy spending to advance climate policies, not obstruct them.”
And leading companies are listening.
Companies are now recognizing that their policy advocacy work plays a big role in their wider impact. For many, the next task is determining how to get this file out of its silo and aligned with company values––or risk alienating employees, investors, customers, and other stakeholders. This includes memberships, lobbying, and overall commitments to political transparency.
“You have three missed calls from investor relations...”
What participants said: Some days it feels like I work in investor relations more than I work in corporate sustainability.
Speaking of getting cross-functionally aligned, if you’re a Chief Sustainability Officer or Director, you should go ahead and book a recurring meeting with your investor relations team.
Investors now expect action on ESG factors. And executives are increasingly being held accountable for their company’s ESG performance, which means they must make substantive changes in how their companies are organized to maximize long-term value for shareholders.
With investors seeking a deeper level of engagement with companies, investor relations teams must cultivate strong relationships with their colleagues in sustainability. Everyone recognizes this priority, but there’s no consensus on how best to manage the information sharing and collaboration between these two offices––let alone how companies should navigate the disclosure maze.
Time for a bigger map?
What participants said: Delving deep into our supply chains is going to require lots of different types of partnerships that don’t yet exist.
Stakeholders want companies to step up to the huge social and environmental challenges of the day, and not just in operations, but deep into their supply chains. Technologies from drones, to blockchain, to inexpensive lab tests that determine a commodity’s origin, are making this easier for stakeholders to ask and more important than ever for companies to deliver on. Don’t expect a round of applause for, say, retrofitting your stateside facilities. Through an advocate’s lens, the bigger you are, the more influence you wield, and the higher the bar.
Companies are wondering how to constructively engage while facing increasing pressure to accept accountability for impacts that occur beyond their direct operational boundaries. There are real challenges to this, especially when supply chains might easily wrap around the world. Companies will need to innovate and initiate creative partnerships to keep up with expectations.
Disclaimer: The views expressed in this blog post are strictly those of the author and do not represent the views of the Bridge Alliance Education Fund, the Bridge Alliance, or the Bridge Alliance’s member organizations. Additionally, the Bridge Alliance Education Fund makes no representations as to the accuracy of this post’s contents.