Sustainability today is not just a matter of regulatory compliance; in fact, many times sustainability begins where regulatory compliance has been completed and represents an extraordinary opportunity to create value within organizations. Corporate boards play a crucial role in this transition, as highlighted in the document published by Accountancy Europe, in collaboration with Chapter Zero Brussels, the European Confederation of Institutes of Internal Auditing (Eciia), and ecoDa. This document offers valuable insights derived from interviews with board members and sustainability experts, sharing success stories, challenges, and lessons learned.

Integrating sustainability into corporate strategy, operations, and culture is essential for promoting lasting change. The document delves into six ways boards can guide this transition:

1. Assert leadership on sustainability, Boards should effectively lead the mindset shift across the organization and support the development of internal competencies on sustainability topics and fostering a culture of continuous improvement.
2. Break down organizational silos. Effective ESG governance requires a cohesive approach involving the entire board and all departments. It also necessitates careful consideration of establishing a dedicated sustainability committee and/or the role of Chief Sustainability Officer.
3. Make most of the executive and senior management, by leveraging the experience, knowledge, and influence of senior leaders to integrate sustainability into corporate strategies. Whether it’s the CEO or CFO, key figures should be engaged and supported in continuous interaction with all board members to avoid communication gaps with management. Incorporate ESG aspects into the remuneration schemes of directors and executives.
4. Consider stakeholders as strategic partners: Engage stakeholders meaningfully and systematically, as collaborative efforts—especially in double materiality analyses—can highlight aspects not identified by the board or corporate management.
5. Approach the materiality assessment as a strategic tool: Ask the right questions regarding risks, impacts, and opportunities, reflect on the viability of your business model and transition path, and use materiality assessments to guide strategic planning, prioritizing the most relevant impacts.
6. Prepare for challenges, trade-offs, and difficult discussions: Addressing short-term operational pressures and the long-term strategic perspective, which now must include sustainability goals, requires foresight, strategic thinking, and investments. Balancing financial and ESG performance is a challenge for many companies.

The document emphasizes that leadership through strategic direction, awareness, and engagement is crucial for promoting the necessary mindset changes within organizations. This may involve potential changes in corporate strategy, risk management, and governance practices, with the board at the center of this transformation.

We invite you to read the full document and remind you of our availability to reflect together on how your organization can implement compatible best practices for effective and transformative ESG governance.