Sustainability Governance

At board level it covers which committee reviews sustainability, what skills directors have and how often the matter is discussed. At management level it covers who owns each target, how performance is reported upward and how risks enter the enterprise risk process. Common pieces are a sustainability or ESG committee, a named executive, links to executive pay, policies on topics such as climate and human rights, and controls over sustainability data. Reporting standards such as the ISSB and ESRS ask companies to describe these arrangements, so governance is the first disclosure area in many frameworks. Practitioners meet it in board charters, committee terms of reference and annual reports. Targets with no named owner or reporting line tend to drift, and unreviewed data reaches the public with its errors intact.

A manufacturer adds sustainability to its board risk committee’s terms of reference. The committee meets quarterly to review emissions against targets, supply chain audit findings and open data issues. The chief operating officer owns the emissions target, and part of her bonus depends on it. Internal audit reviews the reporting process once a year.