Balancing Profit and Purpose: The Role of the Board

Understanding the 'why' behind your company's pursuit of sustainability, and how this clarity will drive your decarbonization program toward a successful outcome.

Key Learnings

The Board's Role in Sustainability

A company's board plays a key role in sustainability by:

• Overseeing Management: Working with the management team to develop and implement sustainability initiatives.
• Maintaining a Broad Perspective: Observing the company's operations from a high level to identify patterns and trends.
• Ensuring Legal Compliance: Meeting legal obligations and filing necessary papers on time.
• Considering Stakeholder Interests: Looking after the interests of shareholders and stakeholders.

Sustainability in the Supply Chain

Large companies with ambitious sustainability targets are increasingly demanding sustainable products from their suppliers. This customer expectation is a powerful force driving smaller companies to prioritize sustainability.

Aligning Purpose and Profit

Integrating sustainability into your business strategy can create a strong alignment between purpose and profit. By offering sustainable products and disclosing their environmental impact, companies can:

• Differentiate their products
• Win more tenders
• Increase profitability

Setting and Achieving Sustainability Targets

When setting sustainability targets, companies should:

• Involve the Board: Present targets to the board for review and ensure alignment with stakeholder expectations.
• Understand the Full Journey: Develop a comprehensive plan to achieve the targets.
• Identify and Manage Risks: Assess and mitigate potential risks associated with not meeting the targets.

Driving Sustainability Through Compensation

Linking sustainability key performance indicators (KPIs) to executive compensation can significantly drive sustainability programs within a business.

Effective Communication

Tailor your communication on sustainability to different audiences:

• Shareholders: Explain the "why" behind your sustainability initiatives and how they align with business goals.
• Other Stakeholders: Focus on "what" you're doing, your commitments, and how you plan to deliver on them.

Finding Your Purpose

Many organizations prioritize profit until external forces compel them to consider purpose. These forces can include stakeholders, investors, customers, and employees. To effectively incorporate purpose into your business strategy:

• Identify the Driving Force: Understand why you need to think about purpose. For example, difficulty attracting top talent due to a lack of focus on sustainability.
• Align Profit and Purpose: Recognize how purpose can support business goals, such as attracting talent to drive innovation and growth.
• Focus on the 'Why': Clearly define the reasons behind your purpose and let it guide your actions.

Watch the full video to learn concrete steps for integrating sustainability into your strategy.