Role of Management leadership
Establishing sustainable development objectives, systems and monitoring mechanisms requires leadership on the part of senior management, and a commitment to continuous improvement.
The role of the board
Without the active involvement of the board of directors, it will be difficult for an organization to implement sustainable business practices. Corporations are encouraged to establish a ‘social responsibility committee’, responsible for setting corporate policies on sustainable development and for dealing with issues such as health and safety, personnel policies, environmental protection, and codes of business conduct.
This list is not all-encompassing. The committee’s exact responsibilities should be dictated by individual business circumstances. Nevertheless, there may be a need to establish a ‘minimum’ set of responsibilities.
It is important that corporate sustainable development policies be implemented consistently throughout an organization. Too many business enterprises observe variable levels of corporate ethics and integrity, depending on the country in which they are operating. This double standard is inconsistent with the concept of sustainable
development, and ensuring that it does not prevail is an important role of the directors.
The board also has a role in monitoring the implementation of its policies. It should receive regular reports on how the policies are implemented, and should be accountable to its stakeholders on the company’s performance against these policies.
The first step for businesses in adopting sustainable development principles is to assess their current position. Management should know the degree to which the company’s activities line up with sustainable development principles. This requires evaluating the company’s overall strategy, the performance of specific operations, and the effect of particular activities.
This process should compare the company’s current performance with the expectations of the stakeholders. Management philosophies and systems should be reviewed; the scope of public disclosures on sustainability topics should be analyzed; and the ability of current information systems to produce the required data should be evaluated.
Various self-assessment devices are available to help this process, such as the GEMI and CERES questionnaires, as well as material tailored to specific industries – for example, the North American chemical industry’s ‘Responsible Care’ programme.
Deciding on a strategy
Once managers have gained an understanding of how its own operations shape up, they should gauge the performance of other, comparable organizations. Comparisons against the standards set by other industries and environmental groups can be instructive.
This task should be relatively easy if there is reasonable public disclosure, organized industry associations and co-operative sustainable development programmes. However, if these structures do not exist, management could approach other businesses to discuss sharing information and possibly establishing an industry group. Management should then consider ways to narrow the gap between the current state of the corporation’s performance and its objectives for the future. A strategy will need to be developed, outlining where the company hopes to position itself relative to its competitors and its stakeholders’ expectations.
A general plan is needed to describe how and when management expects to achieve that goal, together with the various milestones it will reach along the way. Senior management should review and approve the strategy and the plan before submitting them to the board of directors for final approval. Because of the pervasiveness of sustainable development, it is essential that members of the senior management team (representing all facets of the company’s activities) ‘buy in’ to the project. Anything less than full commitment may doom the plan to failure.
Once the strategy and the general plan have been approved, detailed plans should be prepared indicating how the new strategy will affect operations, management systems, information systems and reporting. These should set out measurable goals to be achieved in each area, and explain how progress will be monitored. They should also specify
spending and training requirements.
These plans should be developed through consultation with employees throughout the organization, possibly with the assistance of outside specialists. It will be a timeconsuming and dynamic process, which will entail frequent modifications as input is obtained from several sources.
Once finalized, the plans should be approved by senior management and, ideally, by the board of directors as well.
Small business and private company considerations
Applying the proposed framework will be a challenge for all enterprises, but smaller businesses may encounter additional challenges. Besides sustainability reporting, smaller businesses will have to adapt to the new corporate climate with less in-house expertise, fewer resources and less formal management structures than larger corporations. It will be difficult for them to keep abreast of ever-changing regulatory requirements.
Fortunately, small businesses can find much of the expertise they require through industry associations, chambers of commerce, corporate environmental groups (such as GEMI in the USA), national and international business-government groups (such as the European Green Table), management consultants and universities. There is also a growing body of literature, some of which deals with the experiences of companies that have integrated sustainable development into their operations.
The limited resources of small businesses can be offset by co-operative ventures with other companies. These may, for example, take the form of committees which monitor developments and serve as a forum for exchanging ideas. To the extent that different companies have similar stakeholders, they can compare notes on their stakeholders’
needs and expectations and how they plan to address them.
These cooperative ventures could be more complex, and include formal industry programmes dealing with matters such as performance standards, monitoring and technological research.
Once the expertise and resource issues have been addressed, the generally less formal management structures found in small businesses can be a positive advantage. There will be fewer people to educate within the enterprise, and there will usually be less resistance to change. In addition, there are usually no formal committees to whom the new strategies must be ‘sold’, and no lengthy review and approval procedures to slow the process down. The ‘hands on’ management style common to smaller businesses can also aid the monitoring function: management will be well positioned to spot problems and to make the necessary adjustments.
The road to implementing a sustainable development philosophy will be different for smaller businesses, but with ingenuity, perseverance and cooperation, they can achieve the desired result.