What corporate board of directors should know about sustainability

For boards, this mandate is often spelt out in corporate governance codes, such as the King Code on Corporate Governance, which cover the roles and responsibilities of the boards for directing and controlling an organisation.

Over time, the functioning of boards has evolved to provide leadership that has helped build and shape many great institutions.

Across the world, we find organisations that have thrived and succeeded for many years by constantly reinventing their business and remaining relevant to their stakeholders.

Organisations have grown their markets, diversified their product and service range and expanded through vertical and horizontal integration to generate sustainable outcomes. This implies that sustainability is not foreign to most boards.

Therefore, in the current environment, a conversation on sustainability for a board of directors should focus on the following:

First, the board of directors must understand the linkages and relationships between how non-financial issues impact the long-term financial viability of an organisation.

Read: How to keep sustainability reporting relevant to investor information needs

This context is crucial for providing the board with a clear understanding of the material non-financial risks and opportunities that could affect the organisation‘s financial prospects, often referred to as the ‘business case’ for sustainability across an industry and specific to an organisation's competitive landscape.

Secondly, boards should have clarity about their roles and responsibilities regarding sustainability.

By embedding sustainability, determining the structure for accountability, and monitoring performance against targets, boards play a significant role in integrating sustainability into an organisation’s existing governance framework.

Thirdly, the board of directors must ensure that sustainability reporting by an organisation is relevant, transparent, and meets regulatory standards for compliance.

It also requires establishing systems and processes that ensure the information provided is reliable, accurate, complete, and verifiable.

Organisations require responsible leadership today, one that draws connections and embraces sustainability the right way to create long-term financial success for organisations.

The writer is a partner at PricewaterhouseCoopers. He is an author who writes and speaks widely on corporate reporting topics.