Business Accountability

Senior Management Accountability

Senior leadership, including the full C-suite, maintains formal and coordinated oversight of material and salient sustainable business priorities and is held accountable by the board via compensation packages tied to sustainability goals.

Actions

Led by the full C-suite, companies establish cross-functional mechanisms for senior leadership, including finance, risk management, investor relations and other major business functions, to provide formal and coordinated oversight of material and salient sustainable business priorities. All members of senior management have sustainability goals tailored to their respective roles within the corporation and consistently communicate to employees across the business the value of sustainability goals in core business strategy and priorities. Executives are held accountable for sustainability goals by the board and are incentivized via clear, transparent and publicly disclosed compensation packages, where achieving those goals has a meaningful impact on the proportion of compensation awarded. Corporate annual planning defines specific roles for sustainability integration across business functions and identifies opportunities for cross-functional collaboration, particularly where specific sustainable business priorities are interdependent and interrelated.

Getting Started

Unlike the Critical Impact Actions, the actions within Business Accountability do not have milestones leading to 2030. Each company already has the ability to begin taking or continue integrating these actions today.  Rather than taking iterative steps over the next 10 years, companies should prioritize strengthening their corporate systems and equipping themselves with the tools to address risk and capitalize on opportunity as soon as possible.

This section of the Ceres Roadmap 2030 identifies a list of resources to help companies further integrate sustainability into business accountability.

Ceres: Running the Risk - This report provides guidance to corporate boards on how they can effectively oversee risks posed by ESG issues, including questions for directors to ask management throughout the risk identification, prioritization and mitigation processes.

Ceres: Lead From the Top - This report identifies the skills and experience needed for board members to provide thoughtful oversight of sustainability risks and opportunities, as well as the tools and processes that can help foster deeper engagement at the board level on these issues.

Ceres: View From the Top - This report leverages interviews conducted with dozens of corporate directors, senior corporate leaders and governance experts to explore how effective board engagement can produce tangible, positive environmental and social impacts.

Ceres: Getting Climate Smart - This report is designed to help corporate directors understand why climate change is a board-relevant issue, when climate change should fall within their mandate and how they can oversee climate-related risks and opportunities.

Business and Human Rights: A Five-Step Guide for Company Boards -  This short guidance provides “need to know” information for company leaders about how to meet the UN Guiding Principles’ expectations of doing business with respect for human rights. 

National Association of Corporate Directors (NACD) - A nonprofit membership organization for corporate board members, the NACD elevates board performance by providing board members with practical insights through world-class education, leading-edge research and an ever-growing network of directors.

5 Steps to Tying Executive Compensation to Sustainability -  Five steps on how companies can link sustainability incentives to executive compensation. The steps allow boards and management teams to create incentives that signal their commitment to sustainability.

Principles For Responsible Investing: Integrating ESG Issues into Executive Pay - These principles provide a tangible tool for guiding dialogue between shareholders and investee companies about how to integrate environmental, social and governance (ESG) factors into executive pay.
 

Companies in Action

Alcoa increases percentage of executive incentive pay tied to sustainability metrics and covers diversity issues. The number of companies tying executive compensation to sustainability metrics that go beyond compliance continues to increase and gain relevance in driving performance improvements. According to the Alcoa's 2019 proxy statement, in 2018 the company linked 30% of its annual cash-based incentive goals to sustainability metrics, up from 20% in 2017. Priority metrics covered safety (15%), GHG emission reductions (5%) and diversity metrics, including a goal of increasing female representation in the company's workforce globally (10%).

Kellogg Company engages with employees across the company and fosters senior management accountability. Every department and team in a company can affect an organization’s sustainability commitments. Kellogg's Social Responsibility and Public Policy Committee of the board of directors oversees the company's corporate responsibility strategy and climate policy. The company's 2020 proxy statement also state that policies and strategies overseen by the committee are aligned with its lobbying, advocacy and membership efforts. The company’s SVP of Global Corporate Affairs, who reports to the Chairman and CEO, implements the strategy by working with leaders from across the business and provides regular updates to the CEO and board committee. The company’s Chief Sustainability Officer (CSO) reports to the SVP of Global Corporate Affairs. Kellogg convenes a monthly cross-functional team meeting to assess and track the company’s policy and strategy on corporate responsibility issues such as climate risks, forced labor, child labor, freedom of association and collective bargaining and water management and sanitation. The company CEO, SVP, CSO and other leaders also have annual performance targets that are tied to Kellogg’s corporate responsibility metrics.

The Walt Disney Company’s Chief Financial Officer has ultimate oversight of sustainability. Senior executives who realize the impact of sustainability on the company’s financial health are critical to effectively integrating sustainability into the business. The corporate social responsibility team at Disney is led by the company’s CFO, who partners closely with the CEO, Chief Human Resources Officer, the General Counsel and each of Disney’s business segment leaders to guide the broader strategy. The company has also established executive leadership councils—such as the Environmental Governance Council—to empower executives across the company to own the goals and foster integration of key sustainability priorities into business strategy. Ultimate oversight for social responsibility is held by Disney’s CFO, Christine McCarthy. In the company’s 2019 CSR report, as in previous years, the CFO contributes an opening letter underscoring the connection between corporate social responsibility and the financial health of the company—including driving competitive advantage, enhancing risk management and attracting employees.

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