How to Lead the Board of Directors to a Sustainable Development of Business with the CSR Committees

Abstract

The sustainable development of business requires adjustments in corporate governance to assure the economic, social and environmental aspects of a firm’s responsibility are managed according to the triple bottom line approach. For this purpose, the board of directors can establish devoted corporate social responsibility (CSR) committees to reduce a company’s exposure to responsibility failures. By means of a quantitative analysis on listed firms on FTSE MIB and STAR markets of the Italian Stock Exchange and embracing different theories this paper aims at finding the potential influence of external (soft law and socio-environmental industry risk) and internal (firm size and ownership structure) factors on the presence of CSR committees. This study contributes to the existing literature about sustainability in business, recommends to directors to not underestimate the risk of ‘strategic unsustainability’, and offers to regulators significant food for thought to improve the contribution to sustainable development by companies.

How Boards Can Help Sustainability Transformations

“…With reference to the structural variables, the establishment of a committee dedicated to sustainability (e.g., a CSR committee, sustainability committee, ethics committee, business conduct committee, environmental committee, and ESG committee) has wide relevance. Such a committee would manage social and environmental issues according to principles such as global responsibility, equity, legality, trade-offs between conflicting interests, and integration of relevant dimensions (Mackenzie, 2007;Burke et al, 2017;Salvioni & Gennari, 2019;Gennari, 2019;Elmaghrabi, 2020). This voluntary committee can strongly contribute to the implementation of a convergence process toward sustainability conditions, as its members are typically independent directors and possess specific skills in the social and environmental fields.…”

Analysing the Governance Factors for Sustainability in Organisations and Their Inter-Relations

“…Seven governance factors that facilitate the implementation of sustainability into organisational practises have been identified (Sánchez et al, 2020), and summarised below 1 : (1) Vision and mission (Elkington, 2006;Lee et al, 2013;Amran et al, 2014;Patterson et al, 2017), also called institutional framework (Lozano, 2018a); (2) Policies (Klettner et al, 2014;Shrivastava and Addas, 2014;Glass and Newig, 2019); (3) Reporting (Krechovská and Procházková, 2014;Ortas et al, 2017), ( 4) Communication (Newig et al, 2013;Klettner et al, 2014;Becodo, 2018); (5) Board of Directors (BoD) (Salvioni et al, 2017;Mohamed Adnan et al, 2018;Sánchez et al, 2020); (6) Sustainability department (Ntim et al, 2017;Gennari, 2019); and (7) Person in charge (Mader et al, 2013;Bauer et al, 2018;Sánchez et al, 2020).…”

Circular Economy and Strategic Risk

“…Sustainability, as a long-term vision, is part of the corporate strategy in socially responsible companies. It refers to a concept of global corporate responsibility (social, economic and environmental dimensions) and considers equally the interests of all those who contribute to the current and future company's success (Miller & Serafeim, 2014;Lee et al, 2016;Salvioni et al, 2018;Gennari 2019).…”