Go Beyond Reporting: Align Impact and Culture

Often, when we think about sustainability and social impact in business, we think about reporting, but it’s actually the countless decisions made by directors and executives that drive organisations’ success—however success gets defined and measured. 

Boards of directors in the multinational companies that sell the coffee we drink, the cars we buy, the holidays we take—in short, that dominate where and how we spend our money every day—are increasingly feeling the influence of topics like ESG and stakeholder capitalism permeating their agendas. Indeed, according to a recent report on Accelerating the Green Transition, 78% are somewhat / extremely optimistic the world will take sufficient steps to avoid the worst impacts of climate change. 

The Action-Optimism Gap 

Yet, the decisions boards are making don’t reflect the urgency of the climate emergency. Large corporations employ teams of people to integrate the recommendations of the IFRS Sustainability Disclosure Standards, make disclosures according to the Task Force on Climate-Related Financial Disclosures, and report on their impact using frameworks established by the Global Reporting Initiative. Yet only 24% of board level decisions are affected by companies’ non-financial metrics.

Directors are operating in a culture where it is acceptable to make business decisions that do not consider all stakeholders’ rights, despite the value of those rights being enshrined in the ESG criteria—the very non-financial performance on which their companies report, and that convey long term opportunities and risks for the company. If directors neglect those long-term success factors in their decision-making, is this a dereliction of fiduciary duty? 

The Declaration of Interdependence

The B Corp movement brings together certified businesses that are transforming the global economy into a more inclusive, equitable, and regenerative system—one in which companies comprehensively consider long-term environmental and social impacts of their work. After applicants receive a rigorous and independent review of their B Impact Assessment (BIA), to complete their B Corp certification, every business must sign the Declaration of Interdependence. 

This declaration speaks directly to the philosophy of creating a stakeholder-centric culture, where all board-level decisions are purpose-driven. 

It’s not enough simply to recognise the relevance of the ESG agenda and report progress. Reports must inform decisions made in the boardroom. This is not simply a moral argument. Companies that operate with a social purpose outperformed the S&P 500 by a factor of 10 between 1996 and 2001; purposeful businesses outperformed other companies by 134 percent in the stock market in 2019.  In short, stakeholder-centric businesses—companies that by definition consider all stakeholders in all decision-making—are objectively better businesses.

The B Impact Assessment (BIA)

Of course, signing the Declaration of Interdependence won’t change the culture of multinational corporations overnight. However, publicly committing to consider all risks and opportunities and to follow a stakeholder-centric, BIA-informed roadmap of actions can transform directors’ approach to decision-making. Directors step beyond the limiting norms of shareholder-centricity, embracing beliefs and values that align more closely to communities’ and stakeholders’ needs. 

Intrepid Travel Group, headquartered in Victoria, Australia, has been a B Corp since 2018 when they locked in their mission and completed 23 B Impact assessments, which is a phenomenal example of leadership in action. They amended their constitution (Articles of Association) to lock in their commitment to profit and purpose. Interviewed for a case study, CEO James Thornton said, “We don’t shy away from being commercially successful—it’s not about shareholder ‘bad’ and NGO ‘good’—rather it’s about purpose and profit in balance.” In 2022 Intrepid Travel received a B Corp award for Best for the World: Governance, which means they are one of the highest-scoring B Corps in the world in the governance pillar of the BIA.

Five Steps to Going Beyond Reporting

1. Start with purpose: A facilitated process for articulating purpose, vision and mission can underpin your B Corp journey and help embed impact into your decision-making and the cultural landscape of your board.
2. Analyse your gaps: Sign up for the BIA (free) as a tool to analyse gaps and create a roadmap for impact improvement—including in governance and decision-making.
3. Embed your commitments: Lock stakeholder-centricity into your corporate constitution or  Articles of Association, so directors have clear, legally enshrined permission to consider the interests of all stakeholders.
4. Embrace possibility: Bring cross-functional, diverse teams of people together to review your BIA and baseline the answers. Empower your teams to explore ways of achieving new environmental and social impact goals—recognising that these are tied to the long-term success of your business.
5. Showcase your work: Share and celebrate your commitments, progress, goals and eventually certification with the whole organisation and beyond. B Corps pride themselves on building a broad movement of continuous improvement.

Legislation is Coming…

If you’re not compelled by the opportunity, you may soon be compelled by regulations such as the Corporate Sustainability Reporting Directive. The European Union’s newest legislation is a groundbreaking, much-needed standard that will ensure financial, social and environmental information is given equal weighting in annual performance reports.

As legislated requirements steadily get more stringent (in Europe and around the world), more and more companies will attend to the breadth of ESG factors that affect their success. Leaders, though, are already building stakeholder-centric cultures in their boardrooms. And they’re capturing the rewards in customer loyalty, staff retention, and yes, shareholder returns.

Are you ready to go beyond reporting? To align impact and boardroom culture, to build a better business? Get in touch to define your purpose, analyse your gaps and opportunities, embed your commitments through B Corp Certification, and step into a bright, successful future.