In the past twenty years there has been a slow shift towards embracing the idea of the sustainable world of "Spaceship Earth": Man and the Environment in harmony with an end to the Rape and Pillage of Nature. "Business as Usual" as the prevailing Business Model for Boards and individual Directors is now increasingly (perhaps even exponentially) out of touch.

The now rapidly developing enlightened Board view supports Sustainability. A widely quoted definition of sustainability and sustainable development, is that of the Bruntland Commission of the United Nations on March 20, 1987:

"sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

In more recent times the argument has become more compelling. We know that organisation activity (public and private) is integral with ecological systems and the well-being of people. Therefore, Boards desire the integrity of those natural systems. Many adhere to the categories of The ‘Natural Step’ implied in the Bruntland report. Summarised with examples these are:

• Do not move substances back into nature faster than they are deposited such as fossil fuels.
• Do not make things that nature cannot handle such as endless plastic.
• Do not take from nature faster than it can re-generate such as natural resources.
• Do not hurt the quality of human life and dignity such as supporting fair labor practices.

Unfortunately stressful operating conditions force hard choices: A company with declining revenues may curb sustainability behavior and investment in the belief this will help to ensure it has sufficient capital to remain a going concern. However, such reactive decisions are not always prudent for the long game. Whilst the credit crisis may have temporarily obscured this sustainability trend from view the dynamics around the opportunity has not changed. The drivers still include:

• Ethical environmental values.
• Declining availability and rising costs of energy and water.
• Imminent carbon levies by Governments.
• Competition for discerning Employees.
• Sustainability focused competitors.
• External Assessments by NGO’s and Governments.

It is, therefore, argued that Board Governance needs to seriously embrace strategies, operations, products and services that have positive human and environmental impact. This simultaneous creation of private and public value – is now an established source of potential competitive advantage, or serious disadvantage if you ignore it.

Is sustainability a core strategy of your organisation? Are you operating with sustainable practices? If not, you’re vulnerable to losing competitiveness or political support, equity growth or effective resource management and prosperity; even your organisation’s survival may be at risk.

Moving the Board Forward

Present sustainability as an opportunity. The key to success here is to understand how the Board dynamics operate and ‘pace’ the key players. What are their Team Management Profiles (TMPs) see http://www.tms.co.nz/webpages/products/tmp.aspx. How do they make decisions – what is the balance between emotional, rational and political decision-making?

The 'Assessor-Developers' and analytical decision-makers will respond best to the business case. Make sure you have compelling facts and figures on eco-efficiency savings, for example, and explain how sustainable products and services can build market share, and how sustainability can build brand equity, as well as improve retention of customers

For some 'Explorer-Promoters' and other beliefs decision-makers, the opportunity here is to:

• convince them that sustainability will create profile and a personal legacy, or in the Public Sector demonstrate that there is the opportunity to create better relationships with policy makers and therefore influence enabling regulation, or
• from the values perspective the opportunity is very simple: help create a sustainable future – for your friends and family.

For the ‘Thruster-Organisers’ unleashing the competitive streak will open the minds. Spark interest in sustainability by sharing snippets from competitors. Communicating how they are getting ahead can be a very effective way of whetting your Board's appetite for sustainability.

It can be Inspirational. So, if advising a Board, and you now have their attention on this issue, the challenge is to make the case for sustainability.

• make sure they have the baseline knowledge of this topic and use the right ‘lingo’: ecosystem asset, not rainforest; supply chain security, not running low on resources, for example.
• reinforce the arguments and anecdotes/stories that piqued their interest initially.
• sell the benefits of using sustainability to build new partnerships.

How to get started and achieve Board Ownership

Reach agreement on the level of ambition for sustainability start-up, performer, leader or spearhead. Try to achieve a shared understanding of ambition – where does the organisation want to position itself. Without a shared sense of purpose the organisation will become confused and conflict will arise. Use a longer term aspirational plan with some shorter term goals and make sure they are integrated into the mainstream strategic plan.

Keep them Honest.

Agree an implementation plan with regular review. Often somebody from outside the organisation can provide an important independent perspective. To help them embrace the challenge and put sustainability at the heart of the organisation there will inevitably be a need for patience, persistence and realism. Setbacks need careful navigation and determined ‘multi-pathways’ thinking.

What a Sustainable Organisation Looks Like

A good example as a starter is in the Public Sector. The Australian State of Victoria has recently reviewed its performance in the ‘sustainablity’ stakes and has focussed on 7 key improvement areas:

1. Integrated waste management
2. Materials and resource efficiency
3. Decision making and prioritisation
4. Governance and coordination
5. Evaluation and evidence base
6. Regional focus and engagement
7. Sustainability Fund

A private sector example that has pursued sustainability and social responsibility for 20 years is Hubbards, a New Zealand breakfast cereals company. In a newsletter of that time Dick Hubbard the founder wrote: “Business had a moral obligation to help protect and enhance the social and physical environment they operated in.” Some examples today of what they are doing include: using Richoh CarboNZero printers and photocopiers; serving Fairtrade coffee and tea in all their canteens and staff rooms, and; ongoing use of solar panels to power part of their finished goods warehouse.

However, some kind of general road map may assist any Board put the flesh on any framework agreed or assist in creating a plan. Sustainability topics include the organisation’s:

• Environmental Impacts knowledge
• Scorecard information on environmental impacts
• Supplier integrity
• Travel
• Core business/service offerings
• Delivery/logistical/packaging systems
• Product/service development
• Cycle time (PD; end to end delivery etc)
• Communication strategy
• Alignment, integration and co-ordination of all level plans
• Waste and energy impacts
• Best practice benchmarking
• Stakeholder involvement
• Investment and return on investment, margin and cash flow.

Board Member Capabilities

So at one end of the spectrum we see Boards wanting to move to a sustainable strategy. Unfortunately at the other end we have witnessed lots of examples of the darker side of corporate greed.

Ever increasing numbers of corporate debt scandals; bloated remuneration and directors fees; board governance debacles and share price free falls have all contributed to call into question the effectiveness of boards and the director members who make them up.

Boards are not facing a preordained predicable future but do have a choice. Doing ‘governance’ in the same way as before will not bring about any improvement. As Einstein suggested: “Senility is keep doing the same thing and expecting different results”.

The Board choice is between different mental models, which logically lead to different governance scenarios. One mental model says that this world for all practical purposes is infinite--has no limits. Choosing that mental model will encourage extractive businesses and may take the human economy perilously close to the limits especially for oil and water.

This is evident in the behaviour of many company Boards by continuing to promote “Business As Usual” and defending the status quo. The result could eventually lead to collapse.

Another mental model says the limits are already real and close and that there is not enough time, and that as result corporate behaviour cannot afford to be moderate or responsible or compassionate. At least not in time. That model is self-fulfilling. If the people choose to believe it, they will be proven right. The result will again be collapse. Out of frustration with politicians, business and community leaders and perhaps with themselves, many think this way.

A third mental model says that the limits are real and close and in some cases below our current level of throughput. But there is just enough time, with no time to waste. There is just enough energy, enough material, enough money, enough environmental resilience and enough human virtue to bring about a planned reduction in our ecological foot print of humankind: a sustainability revolution to a much better world for the vast majority.

This third scenario might well be wrong. But the evidence we have seen from world data suggest that it could conceivably be made right. There is no way of knowing for sure other than to try it.

So a responsible Board governance philosophy needs to take ‘Sustainability’ very much into account when thinking about a framework for understanding of the necessary capabilities of Directors. It needs also to be based on a content analysis of both research and experience in this field but also asks ‘what needs to be different’. Boards and directors are (in some cases) long overdue in evaluating their capabilities for the new reality.

Dr Paul Robinson
CEO Team Leadership Services (paul@tls360.com)

Dr Brian Henshall
Emeritus Professor, University of Auckland (brian@henshall.com)