A good governance structure is key to getting your company focused on sustainability. A leader at one of the world’s largest B Corps explains why increasing social and environmental impact is good for business.
Senior Manager, Global Public Affairs and B Corp Program Manager, Laureate International Universities
Who He Is:
In his role at Laureate, Todd supports all internal and external communications, media relations, social impact, B Corp, and thought leadership initiatives. His work experience prior to joining Laureate includes time at the United Nations, World Bank, and Inter-American Development Bank working on social and environmental sustainability initiatives. He also spent four years working as a civil engineer doing water and sanitation permitting and compliance for the U.S. Environmental Protection Agency. Todd holds an MBA in International Business and Development from George Washington University and a bachelor's degree in Civil Engineering from Missouri University of Science and Technology.
Q. You’ve spoken about the importance of having good governance in order for companies to focus on sustainability. Why is this important?
A. Companies leading the way in environmental, social, and governance (ESG) performance understand that improving these—whether it means becoming more environmentally friendly, treating employees well, or improving your supply chain—will positively impact the long-term success of the business. As more companies are focusing on social and environmental sustainability, we are starting to see legal frameworks and governance models that allow companies to build ESG performance goals into the core of their business.
The sustainability of the company is influenced by the governance structure. Good governance will allow a company to authentically embed ESG performance into the core of the business, not just in its marketing.
Q. What is your advice for those trying to implement good governance at their companies?
A. Every company must decide what best practices work in its particular context and objectives. But, from my experience, here are a few practices leading companies have done to help improve ESG performance:
- Benchmark performance and set KPIs. Companies can use tools such as the B Corp certification to benchmark ESG performance against itself and other companies. This allows a company to understand how its business model is impacting various stakeholders, set KPIs, and focus on very specific areas of improvement that aligns with its mission and objectives.
- Consider the impact of the entire business model. As a company, it’s great to focus on improving the employee experience, or getting third-party validation for your product—for example, LEED Certification. However, there are many other important aspects of a business that can have a positive social or environmental impact. For example: consider a supply chain. If you are a large manufacturing company, you likely have a large supply chain that you can influence. Require vendors to meet certain ESG criteria in order to obtain your business. This will allow you to scale your impact beyond your primary stakeholders such as customers and employees.
- Provide employees a sense of purpose. Ensure everyone at the company understands what the company is trying to accomplish, both its financial and ESG objectives, and build excitement and a sense of purpose. Ultimately, a company’s employees are its biggest ambassadors, so getting this right is important. If you treat your employees well, you will attract better talent, and your product will improve. I recently heard of one company that has a $10,000 fund that it gives to one employee every year who may need it for unexpected emergencies or circumstances. This may not be realistic for all companies, but it’s a good example of putting employees first.
Q. What new ideas are moving the needle on sustainability and good governance?
A. Today, there are various reporting and benchmarking tools that a company can use to guide it. For example, the B Corp certification is a rigorous assessment that measures a company’s impact across its entire business model, assessing how a company impacts its customers, employees, the community, and the environment, as well as how the company’s governance structure impacts its ESG performance.
Regulators are also creating viable alternatives to traditional legal frameworks and governance structures that now allow companies to expand their fiduciary duty to achieve a specific public good.
Many states now have a new class of corporations, Benefit Corporations, that are required to create a general public benefit by having a positive impact on stakeholders. Currently 34 states and two countries have adopted similar Benefit Corporation legislation.
Further, policy makers are becoming more vocal in support of these ideas. For example, U.S. Senator Elizabeth Warren introduced federal legislation with her Accountable Capitalism Act that would require a company’s board of directors to fulfill a duty of “creating a general public benefit,” not just profits.
Q. Which leaders can we look to who believe in and are driving sustainability at their companies?
A. The first person I always think about when discussing sustainability is Unilever’s outgoing CEO, Paul Polman. He embodies these ideals.
Larry Fink, BlackRock’s CEO, is an excellent example of leader who continues to challenge other leaders to consider their social and environmental impact when making decisions. In his annual letter to CEOs, he stressed the importance of this, arguing, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Laureate Education, the company I work for, is the first Public Benefit Corporation to be publicly traded on any stock exchange in the world. It is also the second largest Certified B Corporation in the world based on revenue, and has certified every higher education institution in its network.
Danone North America is the world’s largest Public Benefit Corporation and Certified B Corporation. Its parent company, Danone, has a lofty goal to have all subsidiaries become Certified B Corporations.
A company’s leadership should be the driver of ESG performance. It has to be authentic, and it has to start with the company’s leadership.
Q: What advice do you have for sustainability professionals beginning this work?
A. Set clear goals and understand how improving ESG performance improves the business. It is wonderful to think about the social and environmental impact you might have. However, don’t focus entirely on this. Rather, consider how it will improve performance. This will get people’s attention.
For example, imagine you are presenting a proposal to a senior HR colleague to allocate resources for a new employee giving program which will match donations to a charity of the employees’ choice. How will this improve employee morale? Will this help improve recruitment and culture, or reduce attrition? If so, how will this improve the final product and add value to the company?
Finally, find and use metrics, because there is data that can help you back your claims that doing good is also good for business.
Q: What challenge would you pose to anyone reading this article?
A. No matter what your job title is within an organization, whether you are a senior executive at a publicly traded company or you are just starting your career working in a CSR department, you can incorporate sustainability into the work you’re doing.
Every person at an organization has a different perspective and responsibilities in an organization, so find creative ways to incorporate these concepts into your everyday work.
Featured Photo: Support sustainability and micro-entrepreneurship through beekeeping by SITAWI