Global Compact LEAD Board Programme

Facts and Key Features

About Global Compact LEAD Launched in January 2011 to drive innovation and quality among participants of the UN Global Compact, Global Compact LEAD recognizes the critical need for supporting UN Global Compact participants to achieve higher levels of corporate sustainability performance as outlined in the Global Compacts Blueprint for Corporate Sustainability Leadership. LEAD Participants share a commitment to implement the Blueprint and a willingness to lead the Global Compact with strong engagement at the local and global levels. LEAD currently has 56 participants representing all regions of the world.

About PRME The Principles for Responsible Management Education (PRME) is a voluntary engagement platform for business and management education-related institutions. Modeled after the UN Global Compact, PRME signatories express their conviction that academic institutions, by integrating universal values into curriculum and research, can contribute to a more stable and inclusive global market and help build prosperous and thriving societies. Today, nearly 500 institutions from 80 countries are signatory to PRME.

We need Boards everywhere to put sustainability at the heart of their agenda. As Board members of LEAD companies, you have a unique responsibility. I encourage you to pilot the new LEAD Board Programme and help show the power of Boards to unlock the value of corporate sustainability.
Ban Ki-moon, United Nations Secretary-General

A New Agenda for Boards of Directors

Global trends like climate change and population growth, as well as higher levels of transparency and growing consumer concern about the social and environmental impacts of corporations, are profoundly reshaping the business environment. Therefore, it is becoming incumbent upon Boards to broaden their agendas to include more proactive roles in the adoption and oversight of corporate sustainability. Corporate sustainability, defined as the long-term value to society in financial, social, environmental and ethical terms, has long been understood as a crucial contribution to the production and protection of intangible value in terms of corporate reputation, customer loyalty, employee retention and regulatory compliance. However, a strategic approach to corporate sustainability is now increasingly being recognized as producing very tangible results, such as reliable access to natural resources, efficiency gains, reduced transaction costs, as well as greater access to new markets and new capital. So far, corporate sustainability has rarely been driven by Boards of Directors, but recent evidence suggests that by embedding sustainability into its core duties notably business strategy, risk management, executive recruitment and remuneration Directors are uniquely positioned to ensure the full mainstreaming of sustainability into corporate strategies and practices. The fiduciary duty of Directors to protect and enhance shareholder value has historically been used to defend a very narrow focus on profitability. However, as the material impact of non-financial issues is now being fully recognized, legal scholars and corporations alike are beginning to acknowledge that the fiduciary duty actually includes a responsibility to effectively manage risks and opportunities related to corporate sustainability and to respond to the interests and concerns of all stakeholders. Failure to do so exposes both Directors and the companies they oversee to legal and reputational risks. The new LEAD Board Programme is designed to support Directors in managing this new set of expectations. It aims to equip Boards to more effectively oversee the implementation of corporate sustainability strategies with a view to protect and support financial value creation, thus helping companies unlock the value of corporate sustainability.

LEAD BOARD PROGRAMME PILOT 2013/2014 Lead companies are invited to pilot the Lead Board Programme as part of their 2013/2014 Board meetings or retreats. Guided by the experiences of the pilot phase and the example set by Lead companies, the Programme is expected to be made available to all other Global compact participants with relevant governance models in 2014.

Introducing the LEAD Board Programme

The LEAD Board Programme is designed specifically for the elected or appointed members of the organizational body whose duty is to oversee, but not manage, the activities of the company. In many countries this body is called the Board of Directors, but in other countries is sometimes called the Board of Governors or the Supervisory Board. Board duties vary greatly across countries and jurisdictions, but typically include oversight of business strategy, risk management and legal compliance, as well as the recruitment and compensation of the chief executive1. The objectives of the LEAD Board Programme are to help Boards of Directors: Achieve alignment on the companys business case for sustainability; Develop a clear set of expectations for the role of the Board vis--vis management of sustainability issues; and Create an action plan for integrating sustainability into Board responsibilities and structures.

Programme Delivery
Recognizing the time constraints experienced by most Directors, the LEAD Board Programme is designed for in-house delivery. This not only creates a convenient and confidential environment, but also allows curriculum customization based on the industry and operating context of the individual company. the Programme consists of two modules designed to stimulate strategic, company-specific and action-oriented dialogue among directors. these modules are delivered in two sessions that are three to four hours in length with the option of being conducted as consecutive meetings or on the same day as part of regular Board meetings or special retreats. Module One: Materiality of Corporate Sustainability will facilitate discussions of key issues, seek alignment on the business case and establish strategic priorities for the Board. Module Two: The Role of the Board will explore alternative Board structures, establish responsibilities and agree on an action plan for the integration of sustainability into relevant duties. While the Programme is designed to support the Board of Directors, some companies may find it relevant to also involve senior executives in a joint session. Similarly, the Programme may be customized to initially engage a specific group of Directors, such as those constituting a corporate responsibility or sustainability committee.

1 For companies without a Board of Directors, the LEAD Board Programme can be customized for various governance and ownership structures. For example, the Programme could be focused on supporting the role of the Executive Committee (or equivalent) in managing and integrating corporate sustainability.

Key Features of the LEAD Board Programme

Full Customization
The Programme will be tailored to each individual Board in order to match the specific challenges and opportunities facing the particular company. The customization will include everything from the selection of the facilitator, the detailed design of each module and the choice of issue briefs, caselets and best practices to be applied. The customization of the Programme is meant to be a collaborative process. The Programme Facilitator, the Global Compact Office and representatives from the network of PRME business schools will work with relevant company officials (i.e. sustainability, corporate learning, and corporate secretary) to ensure that the final Programme delivery builds on the companys strategies, policies and practices already in place.

Executive Cases & Resources

To support the delivery of the two modules, a database of resources is being developed by LEAD and PRMEs network of academic and strategic partners. Resources include: two to three minute video briefs featuring global issue experts; executive caselets illustrating risks and opportunities related to corporate sustainability in a variety of industries and geographies; and Board best practices featuring examples of how Boards of leading companies are currently overseeing and incentivizing the implementation of corporate sustainability. All resources are designed for a Board-level audience with an emphasis on todays pressing business issues.

Global Roster of Facilitators

A world-class facilitator is key to the successful delivery of the LEAD Board Programme. Companies will have the opportunity to choose from a roster of professional facilitators from a variety of industries, with corporate governance and sustainability expertise. Acknowledging the importance of industry-specific dynamics, facilitators are selected based on their ability to combine global and local contexts, as well as to understand the nuance of corporate governance in different jurisdictions. Over time, the roster will grow to include facilitators with fluency in all six United Nations languages (Arabic, Chinese, English, French, Russian and Spanish).Seasoned business executives, such as members of the Global Compact Board, will also be invited to support the delivery of the Programme on a case-by-case basis.

LEAD Board Programme

KEY COMPONENTS

MODULE DESIGN
Facilitator guidelines and outline of topics covered by Programme modules

Resource Database
Video briefs, executive caselets and best practices

Facilitator Roster
Selection of professional facilitators with corporate governance and sustainability expertise

PREPARATION

Customization
Collaboration between LEAD company, Programme facilitator, academic advisers and the Global Compact Office GOAL: Tailored curriculum, resources and delivery to fit the needs of the specific Board

IN-HOUSE DELIVERY

MODULE 1
Materiality of Corporate Sustainability

MODULE 2
The Role of the Board

LEAD BOARD PROGRAMME MODULES

Module 1: Materiality of Corporate Sustainability

For corporate Boards to fulfill their duties in overseeing a company, they must have a clear and aligned understanding of how sustainability issues impact the company. This module explores the business case for addressing corporate sustainability issues through a facilitated discussion of the most relevant sustainability risks and opportunities for the company, as well as relevant examples of how peer companies are addressing sustainability. Key topics to be addressed:

1 2 3

Business Imperative for Addressing Sustainability Corporate sustainability, once simply considered only a moral responsibility, is now widely recognized as a strategic imperative for business. Discussions under this topic will explore ways in which sustainability issues present both risks and opportunities to businesses in general and to the individual company specifically. Sustainability Priorities Corporate sustainability is still a rather new topic for many Boards. With competing priorities, it can be challenging to navigate which issues present the greatest risks and opportunities to the company. Activities around this topic will help build a robust understanding of the materiality of corporate sustainability and offer expert insights on a selection of sustainability issues relevant to the company. Expectations and Engagement of the Board This section is designed to help clarify expectations of the Board vis-a-vis management in prioritizing and addressing sustainability issues. It raises critical questions about how the Board, as part of its implicit and explicit responsibilities, helps shape the companys sustainability agenda and incentivizes organizational buy-in for material sustainability issues.

Outcome & Impact This module will enable Boards to: Achieve a shared understanding of how sustainability is material to the companys strategy and performance. Strengthen Board knowledge and awareness of sustainability issues relevant to the company. Set expectations for the Board vis-a-vis management for identifying and prioritizing sustainability issues.

The migration from making corporate social responsibility a side activity to really making it an integral part of your business strategy, ought to get an awful lot of attention from the Board. Businesses that understand that, will be embraced by the consumer. Businesses that dont, risk becoming dinosaurs.
Paul Polman, Chief Executive Officer, Unilever

LEAD BOARD PROGRAMME MODULES

Module 2: The Role of the Board

A Board of Directors has an important role to play in helping their organization respond to new operating environments and to ensure that sustainability is integrated into the long-term business strategy of the company. Through an exploration of existing practices, new models and emerging thinking in the area, this module explores how the Board can integrate corporate sustainability into its roles and responsibilities, and into the structure and composition of the Board itself. Key topics to be addressed:

Board Roles & Responsibilities Reflecting on the discussions from the first module, this section will explore the role of the Board in overseeing Corporate Sustainability within their company. Discussions will cover a number of specific areas of Board responsibility, drawing out key considerations for the participating Board and looking at how sustainability could be integrated into all Board duties. Key areas include: Remuneration & Recruitment of Executives Integration of Sustainability into Business Oversight of Implementation & Strategy Communication Oversight over Compliance and Risk Implicit Responsibilities: Culture of Integrity/ Management Approval of Sustainability Priorities & Targets Horizon Scanning /Stewardship

Board Structure & Composition The ability of a Board to effectively oversee corporate sustainability depends to a large extent on its composition and structure. This section explores models and best practices for Board oversight of sustainability adoption and considers the relative merits of these approaches as they relate to the particular company. Key elements include: Board Structure. How do Boards adapt their structures to effectively oversee sustainability (e.g. integrated approach vs. specialized committees)? Diversity & Expertise of Board Members. How do Boards leverage the existing expertise of Board Members? What additional expertise will be required in the future? Stakeholder Engagement. When and how do Boards engage stakeholders to fully understand their changing expectations and possible concerns?

Outcome & Impact This module will enable Boards to: Understand the importance and responsibility of Board leadership in addressing sustainability-related risks and opportunities. Benchmark the effectiveness of current practices in terms of integrating sustainability, and to identify where there are gaps and opportunities. Identify key considerations and assign accountability for actions in order to drive the companys management of sustainability. Agree on a defined role for the Board in overseeing the companys sustainability efforts resulting in a concrete list of next of steps.

Im confident that the LEAD Board Programme will be an enormous contribution to the long-term profitability and sustainability of your company; but more than that, it will help others, encourage others right around the world, who see the leading example that you set and follow.
Sir Mark Moody-Stuart, Chairman, Foundation for the Global Compact

For more information: Ole Hansen hansen4@un.org Tel: +1 212 907 1383 Ingvild A. Srensen soerenseni@un.org Tel: +1 212 907 1393