Why has sustainability representation been dragging its heels to filter through to the NED board, when it has already been flourishing for a while on the executive team?
Perhaps historically, sustainability was deemed the responsibility of everyone, with the viewpoint that every member of staff is an advocate of corporate ethical behaviour, from an environmental, social and governance perspective. But to strengthen investment prospects and ensure the ESG agenda is well-rounded and fit for purpose, a more diverse NED board will be needed to oversee and guide on the multitude of issues facing a company.
It is therefore imperative that businesses up their game and work towards driving systemic and transformative change to ensure the entire operations have fully implemented sustainability. Embedding sustainability is critical and requires high-level expertise which must free-flow from the top, therefore it is puzzling that sustainability representation is still lacking the presence - and recognition - it deserves on the NED board.
Businesses must be held to account regarding their environmental and social impact and while this comes mainly from the C-Suite, all corporate boards need to be fully engaged on the matter because the impact can bring risk. NED boards may be taking their time to develop a more diverse team of directors, perhaps due to resistance in change and the fact sustainability is not seen as a traditional NED role.
How will making sustainability directors a part of the NED board help companies?
But giving a sustainability expert a seat at the NED table is hugely advantageous, particularly from the viewpoint of helping to upskill the rest of the board.
The NED board is a vital lifeline of any company, with Directors – or ‘critical friends’ – meeting five or six times a year under the Chairman, in a supervisory capacity to focus on the business’s strategy, help it adapt and hold the business to account. The board comprises independent former C-Suite executives who bring the outside in – while they are not involved in the daily running of the company they sit on the board for, they possess an invaluable rich, broad and worldly expertise to scrutinise every aspect of the business, while assessing the shareholder value to steer the business forward.
Why should businesses focus on recruiting a non-executive director?
As businesses are undergoing significant transformation in line with sustainability advances and commitments, companies are looking beyond sustainability as a buzzword and are scrutinising its factors through a sharper lens, to become more progressive and forward-thinking in keeping up with constant demands to drive change in a rapidly developing world. This includes appointing the Chief Sustainability Officer (now considered a major player in the C-Suite) to the executive team in order to develop strategy and ensure governance is served top down, with the highest levels of strategic thinking filtering down throughout the business.
While sustainability is still a relative newcomer to the format of the NED board, we are seeing this evolve - albeit slowly - undoubtedly due to increased pressure from shareholders to report on ESG factors, implement change and to make a sustainable profit.
Why should there be a non-executive advisor for sustainability on the NED board?
It does not go unnoticed that the NED board will include an independent member with the relevant expertise and skill set to look after the audit and remuneration committee, in addition to the Chief Finance Officer sitting on the executive team. Bringing the same level of representation for sustainability to the NED board should be a natural development, one which is highly advantageous to the company.
Businesses who hold sustainability in the highest regard showcase this through the website, annual reports and sustainability reports, and therefore it is vital to emphasise this at the most senior level on the NED board, as companies note that sustainability should be looked at from a more commercial angle.
With heavy emphasis on the Net Zero goal before 2050, and companies acting ethically in order to achieve this target, businesses need to harness the challenge by external experts in the field to improve on decision-making and actions.
How does Acre focus on Sustainability NEDs?
As one of the leading recruitment agencies, at Acre we have been involved in the recruitment of Sustainability NEDs for forward-thinking companies, but we believe we need to see this evolve. Do you think we should have more sustainability representation on the NED Board? I would love to hear your thoughts.
Dani Brown is Principal Consultant for Sustainable Business at Acre UK, where she specialises in recruiting senior executives, NED board and advisory roles across the Corporate Affairs, Communications, Public Affairs, Government Relations and Sustainability functions. Dani has recruited Directors, Chairs and CEOsall managing the reputation, purpose and trust of their organisations.
If you are looking to appoint a NED to bring the relevant ESG/Sustainability experience to your company board or you are a NED searching for the next golden opportunity to demonstrate your wealth of experience and effect change, contact Dani to discuss this further at dani.brown@acre.com
