The G in ESG stands for governance – and sustainable corporate governance enables you to anchor, monitor and manage sustainability in your company. This makes it the keystone of corporate sustainability.
But many companies have been reluctant to embark on their journey towards sustainable corporate governance. This is often due to a lack of understanding of what sustainable corporate governance is. Sustainability is seen as a complex topic, and increasingly as a worn-out buzzword – even as narratives of sustainability in our economy are becoming more vital than ever.
Want to find out where you stand with sustainable corporate governance and what your company’s maturity level is? Then use our quick maturity assessment to find out!
In our position paper, our experts also describe three tried-and-tested approaches that you can use to introduce and refine your sustainable corporate governance system.
The most important in 30 seconds
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- Sustainable corporate governance is all about holistic, integrated leadership, management and supervision which serves the common good, respects the environment and keeps your company productive and impactful for the long term.
- Sustainable corporate governance aligns value creation with values, reflecting them in how profits are distributed while also taking financial interests into account.
- Our maturity assessment gives you an opportunity to find out where you are when it comes to sustainable corporate governance and to set your ambitions to match your role in the transition towards sustainability.
- Our experts have developed three modular approaches for successful implementation of sustainable corporate governance.
“Business as usual” is a thing of the past
The variables in our economic system are constantly changing, and new ones are being added to the equation all the time. The rate of progress and change seems to be rising exponentially. Companies are having to think about new developments, regulations and preferences before they become a reality.
To keep up with the hectic pace of change, companies need to rethink their leadership, management and culture. “Business as usual” is a thing of the past: tried-and-tested approaches to doing business that have evolved over the last 250 years and been hugely successful have now become obsolete, as they are unsustainable and no longer offer much chance of success for the future.
- This presents three major challenges for corporate governance:
- Complexity and ambiguity are rising.
- Insufficient accountability and comparability.
Many different criteria need to be considered in decision-making.
Three factors are particularly important when tackling these three challenges: resilience, regulations and relevance. And our experts have summarised how you can successfully integrate sustainability into your company’s leadership structures.
“We need a rethink around corporate leadership. Organisations need to adapt to rising complexity and ambiguity, and recognise that sustainability is now a key criterion for leadership, management and supervision.”
Maturity assessment: sustainable corporate governance
Try our free quick checkup to find out where your company is when it comes to sustainable corporate governance.
What we understand by sustainable corporate governance
When we talk about sustainable corporate governance, we mean a holistic and integrated system of corporate leadership, management and supervision that respects the environment, serves the common good and keeps your company productive and impactful for the long term. This approach includes a business model tailored to your stakeholders that internalises externalities, aligns value creation with values, and reflects these values in how profits are distributed while also taking financial interests into account.
“Companies are often faced with a dilemma: they want to work sustainably, but are worried about negative effects on turnover and profits. Sustainable corporate governance is a model which can help companies to develop responsible strategies and operating models. The key lies in enabling everyone and getting them all involved. Pay structures, incentives and collaboration all need rethinking.”
What’s your company’s level of ambition when it comes to sustainable corporate governance?
What role will your company’s leaders play in the sustainable transformation of our economy? How do you ensure that resource shortages and preserving value are factored into your structures and processes? How do your company’s leaders go about accepting social responsibility? And how do you manage and monitor your company’s processes to maintain productivity and efficiency?
We classify sustainable corporate governance programmes into four levels of ambition:
Download our position paper
Sustainable corporate governance
Conformist – focus on compliance
Focusing on financial returns, conformists consider sustainability simply as a legal requirement to be complied with.
Pragmatist – focus on objectives
Pragmatists are also focused on financial returns, and they recognise that efficient processes which conserve resources can be an effective means to this end – but only use these processes where they are financially viable.
Strategist – focus on success
Companies need human and material resources, but they are in increasingly short supply. Strategists understand that they can only succeed in the long term if these resources are maintained.
Visionary – intrinsically motivated
Visionaries consider themselves to be part of a global environmental, social and economic ecosystem, and reflect this understanding in their processes, systems and management approach.
How can you achieve sustainable corporate governance in your company? We’ve developed three approaches.
- Sustainable corporate governance throughout a management system
- Sustainable corporate governance with a dedicated department
- Sustainable corporate governance integrated into corporate purpose
Sustainable corporate governance throughout a management system
This approach requires a foundational approach to scale up established structures, processes and systems using an existing management system. Sustainability expertise is kept within the company’s departments, and is applied throughout the company using tried-and-tested management systems.
Sustainable corporate governance with a dedicated department
This approach concentrates sustainability expertise in a single department, allowing interfaces to be easily managed and experience to be shared. Experts are found in a central location, enabling them to pass on their know-how as required.
Sustainable corporate governance integrated into corporate purpose
In this approach, leaders feed sustainability into the whole organisation from the top down, anchoring the issue into the purpose of the company. The company fully adopts the narrative of sustainability – right up to sustainable innovation, finance and leadership.
“There are many factors that determine which approach to sustainable corporate governance is right for a particular company. These factors include the company’s maturity level and its purpose. Corporate culture can be both a hindrance and a help when it comes to sustainable transformation.”
Claudia Feick,Director, Sustainability Services at PwC GermanyDownload our position paper
Sustainable corporate governance: respecting the environment, serving the common good, maintaining productivity
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