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Nov. 24 — Getting sustainability on a corporate boardroom's busy agenda may be just a matter of how a particular issue is framed, lawyers and directors said Nov. 20.
There are a number of ways that sustainability issues can bubble up to the boardroom level, whether directors are viewing them in terms of risk management, as fiduciary responsibilities or as required disclosures, said Ellen Canan Grady, a Philadelphia-based member of Cozen O'Connor PC.
But until there is some type of “hook,” boards won't place them on their “chock full” agenda, she said.
Sustainability in the minds of directors falls in the “do-good category,” said John H. Quinn Jr., a founder of Quinn, Racusin & Gazzola. The question then is whether others can help convince business people that sustainability is a “dollars and cents” issue.
The speakers were part of the American Bar Association Business Law Section's fall meeting in Washington.
Douglas Park, director of Legal Policy & Outreach at the Sustainability Accounting Standards Board, said that when sustainability is narrowly framed—such as in terms of an environmental or social issue—it is understandable that it might not get the board's attention. He added that from his experience, the same issues tend to gain more traction at the boardroom when they are addressed in terms of risk oversight and long-term value creation.
Peter R. Gleason, president of the National Association of Corporate Directors, said that educating boards on sustainability is not an easy task. Tying the topic to strategy, risk and long-term value creation makes it easier for boards “to get their hands around it,” he added.
And boards may not be the only ones that need educating on the matter. John Stout, a Minneapolis-based partner at Fredrikson & Byron PA, said that sustainability has been under-appreciated by practitioners as well, who in many cases aren't sufficiently educated themselves to help their clients on the issue.
Elisse B. Walter, former chairman of the Securities and Exchange Commission and current director at Occidental Petroleum, said that boards are getting information on sustainability. However, they often are not aware they are getting that information unless it's in the company's financial statements, she said.
The broad topic of sustainability can be overwhelming because it has “a lot of tentacles,” she said.
Walter, who also sits on the SASB's board, said SASB tries to make the topic less overwhelming by highlighting five to eight sustainability issues in each industry.
SASB's mission is to develop sustainability accounting standards that will aid companies in making material disclosures to investors.
Nancy Cleveland, founder and chief operating officer at Sustrana LLC, said there is a general perception that sustainability is a big amorphous massive idea that covers disparate and unrelated business topics.
However, sustainability really is a “business management discipline,” Cleveland suggested. Just as with financial reporting, companies must have a framework of internal processes, controls and a methodology to filter sustainability information so that it reaches the boardroom, she said.
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