The successful implementation of corporate sustainability is a critical leadership responsibility. The growing momentum of corporate sustainability underpinned by economic, environmental, social, and governance impacts cannot be ignored by businesses around the World. To date, the most sustainable and competitive businesses in the world are no longer defined by profits alone but by their sustainability profile. Sustainability is no longer a nice thing to do but a business imperative.
In Zimbabwe, statutory instruments like SI.134 of 2019 Securities and Exchange (Zimbabwe Stock Exchange Listing Requirements) Rule, the Public Entities Corporate Governance Act [10:31], National Code on Corporate Governance in Zimbabwe (ZIMCODE), and Companies and Other Business Entities Act [24:31] places the responsibility of the company’s affairs in the hands of directors which includes sustainability matters.
The upcoming International Sustainability Standards Board (ISSB) Standards – IFRS S1:‘General Requirements for Disclosure of Sustainability-related financial information’ [exposure draft] reinforces the board’s responsibility over sustainability matters. Similarly, other international sustainability standards like the Global Reporting Initiatives (GRI), Taskforce on Climate Related Financial Disclosures (TCFD), and Sustainability Accounting Standards Board (SASB) requires Board involvement in managing sustainability and related impacts.
The Board of Directors have a critical responsibility of owning the sustainability narrative and be accountable for the sustainability policies and performance of their companies. It is the board’s responsibility to formulate the company’s sustainability policy and strategy. Further, approve sustainability goals, objectives, and targets. Directors have the mandate to ensure material sustainability topics on economic, environmental, social, and governance are evaluated and approved for consistence with the business for public accountability.
The successful companies in implementing sustainability like Unilever, Coca Cola, ING, Shell and others ensure sustainability is part of board governance by including it into their company Board Charter and performance evaluation matrix. In light of this, corporate governance codes like UK Corporate Governance Code, OECD Code of Corporate Governance and King IV have embedded sustainability into board responsibility. As such, it is core that Boards establish Sustainability Governance Frameworks for their companies. Such could include updating terms of reference, setting up Sustainability/ESG Committees, specific Sustainability Charter, Sustainability Policy, and implementation strategy. Lastly, it is important that the Board ensures that Executives are accountable on sustainability matters and avoid greenwashing which could result in the Board being legally liable. The rising ESG litigations in the US should be taken as a warning to directors in developing countries as their companies embark on their sustainability journey.