Governance

Financial Report Sustainability Report
Shareholders and potential investors want to know how an organization is governed.  Here the company provides the following information:

  • the board members
  • their qualifications
  • board committees
  • their responsibilities

Sometimes this information is found in the front of an annual report. More commonly, it is located on the back inside cover.

Well-governed companies do not separate environmental and social governance from financial governance.  Many will have a special board committee with broad responsibilities for social and environmental aspects of performance, requiring regular reporting from management.

Some board members also review and critically question the performance as reported in the sustainability report before it is released or distributed to the public.

What Happens in Practice?

MEC, an outdoor clothier and equipment company based in Canada, describes how its board is formed and its relationship with its stakeholders. Note that it has a standing Sustainability Committee established in 2006. Click here to view.
Cenovus, an oil and gas company describes the responsibility of the Board of Directors. It has a Safety, Environment and Responsibility Committee and an Audit Committee that reviews matters relating to corporate responsibility performance. Click here to view.

Fast Facts

How many companies discuss governance?

Based on a sample of nearly 500 of the largest corporations in the world, governance is a frequently discussed topic:

89 percent provided information on governance

– Source: CSR Trends 2010

What Companies Say…about Governance

“The leadership within the organization must emphasize the governance and social side not only in their guidelines and policies but also it must be played out in the behavior as well.

“The more employees get involved, the more feedback they can give. That is good. They are part of the governance process as well.”

– Quotes from Reporting Companies

Takeaway

Look for lines of reporting from management to the board regarding sustainability issues. This type of reporting structure shows strong “tone at the top,” suggesting that the topics are taken seriously by the organization. (See the Assurance module for more information.)