Boards of directors are increasingly paying attention to the risks and opportunities associated with corporate responsibility, sustainability and climate change, according to a survey commissioned and recently released by Deloitte and Corporate Board Member magazine. 

The survey of 220 directors at U.S. companies with $1 billion or more in revenue highlights the board’s growing role in oversight of corporate responsibility and sustainability (CR&S).

“The perfect storm of emerging regulations, increased requirements for reporting and transparency, heightened pressure from investors, energy price volatility and market demands for green products and technologies is driving CR&S as a business imperative,” said Eric Hespenheide of Deloitte’s Enterprise Sustainability group. 

“Despite the current economic environment the board’s role is undoubtedly increasing as there is greater awareness of the business risks and opportunities associated with corporate responsibility, sustainability and climate change.”

Key findings from the survey include:

• Seventy-nine percent of directors responding have a strong or moderate understanding of the business risks associated with CR&S and climate change.
• Seventy-six percent have a strong or moderate understanding of the business opportunities associated with CR&S and climate change.
• Almost one-half of directors think their boards and management are committed to addressing CR&S and climate change.
• One-half of directors think their companies’ response to CR&S is integrated into business strategy and risk management, while 41 percent report no such integration.

“CR&S is not just about philanthropy or going green - it is about managing risk, generating value and ensuring the long-term viability of an enterprise,” added Hespenheide. “It includes consideration of the interdependencies between environmental, social and financial performance, including new views on regulation, accountability, transparency, corporate governance and the potential impacts of climate change on business operations. These are all issues that fall under the board’s purview.”

Additional key findings include:

• Thirty percent of directors reported that their companies have set goals for reducing greenhouse gas emissions; fifty nine percent reported no such commitment.
• Almost one-third of directors think there is growing investor interest in their companies’ response to climate change/business sustainability issues, while 39 percent do not think there is growing interest.
• Thirty-five percent of directors see value in having an environmental audit - measuring greenhouse gas emissions and energy consumption.
• Thirty-seven percent of directors favour full-board oversight of CR&S, while another 37 percent indicated oversight should reside in existing board committees, such as risk committees (24 percent), governance committees (24 percent), strategy committees (22 percent) and audit committees (15 percent).

“These results prove that directors need and want to be engaged on climate change issues and that many of them are getting up to speed,” said Mindy Lubber, president of Ceres and advisor to the survey. “Smart directors will catch the wave of climate opportunities, while others get dragged down in the undertow of unidentified risk.”

“Investors filed a record number of CR&S and climate change-related shareholder resolutions in 2008 and we expect that trend to continue upward,” added Chris Park of Deloitte’s Enterprise Sustainability group. “Increasingly, institutional and individual shareholders want to know not only if leadership is prepared to manage risks associated with emerging regulations and increased reporting requirements on environmental and social performance. They also want more insight into leadership’s strategy for capitalizing on the CR&S opportunities that will create long-term shareholder value.”

For in-depth information on the board’s role in CR&S please view “The Responsible and Sustainable Board” white paper, which can be found here: www.deloitte.com/us/responsibleboard.

Source: Deloitte