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March 04, 2009

Role of Corporate Boards in Sustainability Issues Is Growing
    by Robert Kropp

Survey of board directors finds that as shareowner resolutions increase, more boards of directors are addressing the risks and opportunities of sustainability issues. -- A survey of 220 directors at US companies with $1 billion or more in revenue finds that despite the current economic environment, corporate boards of directors have taken on a growing role in overseeing the risks and opportunities associated with corporate responsibility and sustainability (CR&S) and climate change.

The survey was commissioned by Deloitte, a worldwide provider of audit, consulting, financial advisory, risk management, and tax services, and conducted via email in August 2008 by Corporate Board Member magazine.

According to Eric Hespenheide of Deloitte's Enterprise Sustainability Group, "CR&S is about managing risk, generating value and ensuring the long-term viability of an enterprise. It includes consideration of the interdependencies between environmental, social and financial performance, including new views on regulation, accountability, transparency, corporate governance and the potential impacts of climate change on business operations."

More than three-quarters of respondents to the survey claim to have at least a moderate understanding of the business risks and opportunities associated with CR&S, and half believe that attention to CR&S issues is integrated into their companies' business strategy and risk management.

As for board attitudes regarding climate change, only 30% of directors reported that their companies have set goals for reducing greenhouse gas emissions, while 59% reported no commitment. At the same time, 35% of directors see value in having an environmental audit that measures greenhouse gas emissions and energy consumption. One-third of directors think there is growing investor interest in their companies' response to climate change and business sustainability issues.

When asked how their boards should organize to consider climate change and business sustainability issues, over one-third of respondents favored full board oversight, while another 37% indicated oversight should reside in existing board committees.

"Investors filed a record number of CR&S and climate change–related shareholder resolutions in 2008 and we expect that trend to continue upward," said Chris Park of Deloitte. "Shareholders want to know if leadership is prepared to manage risks, and they more insight into strategy for capitalizing on CR&S opportunities."

A Deloitte white paper entitled The Responsible and Sustainable Board includes data from the survey.

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