Sustainable development has been primarily discussed over the past few decades since worldwide events like war and rapid technological growth have trashed the environment. While each corporation transforms its policies under sustainability independently, there are discussions about whether the board of directors should reflect the stakeholders.
Currently, one of the dominant viewpoints on that matter is that the diversity of the board of directors is not important if the directors themselves are competent and have a wide skill range. This position, indeed, holds its merits, as it is crucial for any company to have leaders who are well-versed in management, and from that perspective, diversity fades into the background. However, modern conditions shape sustainability and rapid development not only in the field of technology or business but in human rights, as well. While managerial abilities are important, actual experience that also comes from different perspectives is crucial for sustainable leadership. Thus, it becomes imperative to have a board of directors who are not only skilled but also come from diverse backgrounds.
Diversity in the backgrounds of directors and stakeholders ensures an extensive range of suggested solutions to environmental issues and ideas for sustainable business. Some studies have indicated that companies report on Social Corporate Responsibility, a part of their sustainability report, only because of public pressure and legal regulations (Maj, 2018). Since the group stakeholders are typically more diverse than the board of directors, the latter should apply this practice at work. Moreover, stakeholders can remove members of the board of directors who do not fulfill their duties (Ross, 2022). That is why the board of directors should have a personal interest in reflecting the views of the organization’s stakeholders.
Another critical factor is that sustainability significantly depends on the collective efforts of all corporations and hence depends on the decisions made by director boards. One of the studies showed that the nature of the board of directors endorses the company’s green image and indicates whether an organization is sustainable (Chams and GarcĂa-BlandĂłn, 2019). Another study supported the claim that the directors’ board has a good influence on a corporation’s sustainability performance (Naciti, 2019). It is also essential to integrate stakeholders in creating sustainable policies by using advice from studies like Juntunen et al. (2018) with listed strategies. That will enhance the company’s positioning in the media and society and benefit the environment.
Reference List
Chams, N. and GarcĂa-BlandĂłn, J. (2019) “Sustainable or not sustainable? the role of the Board of Directors,” Journal of Cleaner Production, 226, pp. 1067–1081. Web.
Naciti, V. (2019) “Corporate governance and board of directors: the effect of a board composition on firm Sustainability Performance,” Journal of Cleaner Production, 237, p. 117727. Web.
Maj, J. (2018) “Embedding diversity in Sustainability Reporting,” Sustainability, 10(7), p. 2487. Web.
Ross, S. (2022) How do a corporation’s shareholders influence its board of directors?, Investopedia. Web.
Juntunen, J.K. et al. (2018) “Strategies for integrating stakeholders into Sustainability Innovation: A configurational perspective,” Journal of Product Innovation Management, 36(3), pp. 331–355. Web.