Updated: Apr 22, 2019
The following article appeared in Sustainable Brands on April 21, 2019
The board of directors of any organization exists to provide vision and guidance. Ideally, they are meant to steer companies in the right direction, and keep them out of trouble.
Acre, a sustainability-focused recruitment agency, recently published a white paper called “The Case for the Social Board (and how to build one).” On the surface, a “social board” sounds like it might be the latest employee resource group tasked with organizing Friday happy hour (hopefully, most organizations have one of those, too), but this paper brings a fresh perspective on ways companies can keep an eye on broad environmental, social and governance (ESG) issues at the board level, in pursuit of the kind of society we want.
I caught up with co-author Catherine Harris, Principle Consultant at Acre, to learn more about the concept of a social board and how companies are bringing it to life in different ways.
This paper takes a new spin on boardroom conversations — it suggests the concept of a social board. What is a social board?
Catherine Harris: The idea of a Social Board is that the voice of society is included as a key stakeholder in the boardroom. This voice may be communicated in a number of ways — through an engaged Non-Exec Director(s) with background and experience in some of the issues outlined below; a separate Stakeholder Advisory Panel (SAP) also attended by board members, or simply a diverse board which more closely represents both society and the employees within the business itself. These individuals’ roles are to provide insights and direction on issues ranging from finance (tax avoidance or high executive pay) or employment (diversity & inclusion, gender pay gap, modern slavery and zero-hours contracts); to operations (data privacy, cyber breaches and health/safety practices) and the environment (climate-related risk, air pollution or ocean plastic pollution).
What is the business advantage of having a social board?
CH: A Social Board aims to create long-term value by tackling business-critical issues head on. Businesses are increasingly under scrutiny from society, employees, shareholders and investors — and there’s compelling evidence to show that companies with robust sustainability practices perform significantly better, too. We’re seeing ESG quant and SDG funds on the rise — some of which are outperforming their competitors by a significant amount. For example, Arabesque Partners has established an ESG Quant fund integrating sustainability data with financial analysis, which has outperformed the MSCI by over 5 percent since its inception in 2014.
Patagonia has seen revenue quadruple in the past decade, and their CEO, Rose Marcario, is clear that doubling down on sustainability has created new markets for them and made them more money — their ‘don’t buy this jacket’ campaign alone led to a 40 percent increase in sales the subsequent two years.
Interface Inc., the world’s largest designer and maker of carpet tiles, reported a 60 percent increase in sales and a doubling of profits over a 12-year period when they were full-tilt with their sustainability initiatives to reduce waste and water and to become a truly circular business.
How can interested companies establish a Social Board? Is it an entirely new board? A new person on the board? What does this look like in practice?
CH: There are a number of ways a company can go about doing this...