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Successful Triple Bottom Line Sustainability Depends On Board of Directors’ Leadership

May 23, 2011 Leave a comment

The notion of organizational leadership has traditionally been viewed in a top/down reductionist thinking fashion. At the pinnacle of the organization is the CEO, followed by the other C-Suite incumbents, then senior executives, then middle management and so on and so on. The idea that an organization’s board of directors has the ultimate leadership responsibility is either not typically considered, or the role of a CEO has become so dominant that no Chairman wants to fight that leadership battle anymore.

This is no trivial mater in regard to who should lead sustainability initiatives, and triple bottom line sustainability (tbls) in particular. It’s one thing to report good intentions through a Corporate Social Responsibility report, but another entirely to envision and lead the complex long-term business changes entailed in a tbls strategy, since this is one of the most systemic and challenging change-related journeys on which any organization may embark. The complexity of triple bottom line sustainability has been emphasized in previous blogs, and is further inferred from the following tbls definition adopted by The Leadership Alliance Inc: “Triple bottom line sustainability is the result of the activities of an organization, voluntary or governed by law, that demonstrate the ability of the organization to maintain viable its business operations (including financial viability as appropriate) whilst not negatively impacting any social or ecological systems.”

The board of directors in principle is ideally placed to envisage and lead this demanding journey, given that it has responsibility for the interests of all the stakeholders, not just shareholders, as its mandate. Without the board of directors’ interest, broad experience, vision, knowledge, and leadership, regarding a chosen sustainability variant, it is not likely that anyone else in the organization will pay much attention, other than for “window dressing”, and this has been born out through our research [1].

Furthermore, even a top management that is committed to sustainability does not last forever, and the responsibility for maintaining a change initiative falls back on the governance structure. If the board of directors does not understand the essence of an organizational change, the risk is that top management will be replaced with new managers who have new ideas of their own – organizations are replete with change-credibility “black holes” created when change sponsors have moved-on from much hyped initiatives without accomplishing their objectives.

As I look around at sustainability initiatives in progress, I see more and more evidence of the application of the traditional reductionist approach, whereby responsibility for sustainability is parceled out to individual organizational entities without regard for the need for a new and innovative organizational strategy plus an overarching planning process capable of addressing systemically the unpredictability and dynamic complexity in which today’s organizations operate. All too often innovation, the key to sustainability, is targeted to saving electricity, reducing waste, or preventing usage of non-biodegradable materials; of course such initiatives are important, but typically they are cherry picking, and no consideration is given to applying innovation to business planning that could lead to restructuring of the organization, and the optimal redesign of its strategy to eventuate in an organization truly designed for the tbl sustainability journey.

This kind of bold new thinking must come from the board of directors which has the power and the mandate to exercise leadership in setting organizational direction for the CEO and the C-suite … when will you directors heed the call? If someone in leadership is reading this blog and would like to know how we at The Leadership Alliance Inc. can assist an organization to set-off optimally on the tbl sustainability journey, please contact us, and as always your comments are of great interest to us.

 Reference:

[1] Smith, P.A.C., Sharicz, C., “The Shift Needed For Sustainability”, The Learning Organization, Vol. 18, No. 1, 2011

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Corporate Sustainability – Board, Management, Market, and Stakeholders

January 17, 2011 5 comments

I am carrying out research on the adoption of Triple Bottom Line Sustainability (TBLS) in business companies, and I am pondering the question “Is it all about financial return?” In this regard I am interested in tapping into the wisdom of readers of this Blog.

I define TBLS as the outcome of the activities of an organization, voluntary or governed by law, that demonstrate the ability of the organization to ethically maintain its business operations (including financial viability) whilst not negatively impacting any social or ecological systems.

As I understand it, the Board of Directors of a company is responsible to the shareholders for optimizing shareholder value, making sure profit compares favorably with businesses in comparable industries, being competitive relative to challengers, and guiding the company’s strategic management by controlling and monitoring the activities of the company’s management. The CEO and management team in theory only design and run the company to satisfy the Board. This looks to me like a directive tailored for ‘Financial’ not ‘TBL’ Sustainability.

The Board and/or the CEO and the management team may be wise enough to envisage enhanced profits and market position by taking advantage of the uniqueness of products and services tailored to TBLS; however, this approach is still financially, rather than ethically, motivated.

It would be encouraging to see large numbers of companies embracing TBLS for ethical reasons, but that may not be realistic given the Board mandate highlighted above. It seems to me that the ethically driven leverage for introduction of TBLS comes from the marketplace, the shareholders and the stakeholders – we the people!! In other words, if enough consumers, shareholders and stakeholders are sensitive to ethical concerns and place pressure on companies to operate in a TBLS manner or else risk earning lower company profits and reducing shareholder value, then the relevant Boards have a responsibility to make appropriate changes to introduce and sustain TBLS, and must ensure the changes take place (or risk the corporate consequences). Indeed under these circumstances the CEOs and management strategists ought also to be pressing for change based on strategic imperatives. However, even if corporate action is based on the ethical concerns of “we the people”, the outcome is still based on a Board’s financial obligations.

The only other option for introduction of TBLS that I see is by Government intervention through a change in Corporation law – not likely to happen I think.

Your thoughts and comments on the general thrust of this Bog would be most welcome and thanks in advance for taking time to consider the thoughts expressed here …