Governance for Sustainability
CSR Governance Guidelines
Boards of directors recognize that effective management of social and environmental risks can improve business performance. This realization has led to increased oversight by boards over how the company is managing its social and environmental performance as part of their fiduciary responsibility. This oversight is referred to as Corporate Social Responsibility (CSR) Governance.
These Guidelines provide guidance to board directors and senior management on a best practice approach for CSR Governance. The Guidelines are informed by CBSR’s experience with member companies, consultations with board directors and senior management representatives, and international research into global trends and best practices1.
The CSR Governance Guidelines have four components:
- An ‘Assessment Tool’ or checklist to help boards identify current practices and gaps
- A ‘Phased Approach’ or roadmap to help boards of directors develop a CSR Governance framework or methodology, including suggested Terms of Reference for a CSR Committee
- ‘CSR Questions for Senior Management’ for directors to understand the firm’s approach to CSR management.
- Canadian examples of ‘Leading Practice’ in CSR Governance
Definition of CSR
Corporate Social Responsibility is defined as a company’s environmental, social and economic performance and the impacts of the company on its internal and external stakeholders2. Some companies use other terms for CSR such as corporate responsibility, corporate sustainability and “triple bottom line”. Other companies prefer to treat each CSR item separately, such as environmental management and community or employee relations, etc.
Implications of CSR for Boards
CSR issues can represent significant risks and opportunities to company performance. Oversight of social and environmental risk management and CSR performance therefore need to be incorporated into board governance to ensure that long term shareholder and stakeholder interests are protected and promoted.
Boards will want to understand how and when CSR issues can:
- Impact or enhance a company’s strategy and vision
- Necessitate board level oversight and accountability
- Influence risk identification and management
- Require changes to board composition and expertise, and
- Improve external disclosure.
CSR Governance can be particularly challenging because CSR performance is often reported through different business lines, making it difficult for boards to have an overall picture of CSR. The development of an effective CSR Governance framework can help boards to ensure that CSR issues and opportunities are well-managed and maximized.
Andrea Baldwin is a director in the Toronto office of CBSR (Canadian Business for Social Responsibility). Coro Strandberg is the principal of Strandberg Consulting, a CBSR Associate, and author of a 2008 Conference Board of Canada report on CSR Governance. Industry Canada and Environment Canada provided funding for development of the CSR Governance Guidelines. For more information on the Guidelines, please contact CBSR at 416-703-7435
1. “The Role of the Board of Directors in CSR”, Conference Board of Canada report authored by Coro Strandberg, Strandberg Consulting, 2008.
2. A stakeholder is a person, group, organization or system who affects or can be affected by an organization’s actions. Stakeholders include customers, employees, communities, government, civil society, investors and suppliers. The environment and future generations are also considered as stakeholders.
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