The fifth edition of the "Sustainability Governance" Observatory, established in 2013 by Sustainability Makers and the ALTIS Graduate School of Sustainable Management of Università Cattolica del Sacro Cuore with the aim of monitoring the integration of sustainability into corporate governance in Italy and Europe, has been presented.
This edition for the first time goes beyond European borders by analyzing a sample of over 1,400 listed companies around the world, through the study of an international database and empirical data from various company documents, including the report on corporate governance, the report on remuneration, the sustainability report and the curricula vitae of the members of the Boards of Directors of the companies under analysis.
If in 2013 only one in 4 of the large listed companies had a sustainability committee within the Board of Directors, today in Italian and French companies , internal board committees with sustainability powers are present in 92.5% of cases: their presence is now the standard, A result that highlights the long-term effect of self-regulatory codes on companies in those countries in promoting sustainable governance. If Italy and France are leaders in this aspect, the USA is at the tail end with only 11% of companies listed on the Nasdaq.
Looking within these committees, a snapshot of the responsibilities entrusted to sustainability committees emerges: in Italy, in 45.9% of cases there is a committee within the Board of Directors dedicated exclusively to sustainability; however, it is also common to find committees with multiple delegations, especially with sustainability combined with risk control (24.3%).
"This figure raises a very important question, namely whether the current approach to sustainability governance represents a potential loss of opportunity, as it does not seem to consider sustainability as a lever for competitiveness" – observes Matteo Pedrini, Scientific Director of Sustainability Makers.
The research team then asked whether those who sit on boards of directors have sustainability skills, analyzing more than 2,500 curricula vitae of board members. Encouragingly, almost all companies listed on the FTSE-MIB index (85%) have at least one adviser with such expertise; on the other hand, if we look at the overall picture, on average in Italy only 1 in 6 directors is competent in sustainability.
"The sustainable transition requires a wide range of skills, unfortunately still absent in many cases or not very widespread: the picture that emerged might seem alarming, given the urgency of integrating sustainability into the business model and the way companies operate, in the direction of environmental transition and social responsibility objectives" - comments Matteo Pedrini - "This is where the role of the sustainability professional called upon to promote the training and development of sustainability skills among directors becomes increasingly strategic, for example through induction processes and consolidation of the sustainable culture among the various company functions".
Furthermore, the Observatory showed that the presence of forms of sustainability governance is not always sufficient to improve the economic, environmental and social performance of companies. Globally (S&P1200) 2 out of 5 companies have an internal board or managerial committee dedicated exclusively to overseeing social and environmental issues; sustainable remuneration schemes and skills are less common. Moreover, these figures are even lower when considering the index of the best performing companies (S&P500).
In Italy, the presence of forms of governance of sustainability seems to lead to a fair improvement in environmental and social performance, while it does not seem relevant for economic performance.
At the international level, the effect on performance is more significant, especially in contexts where companies freely choose how to integrate sustainability into governance.
But how much are top management incentivized in terms of remuneration ? More and more, as it emerges that the presence of sustainability objectives in the remuneration schemes of top management has undergone a strong acceleration: almost all the main Italian listed companies (87.5% FTSE-MIB) have included sustainability objectives in their remuneration schemes. Looking at other countries, in France 100% of CAC-40 companies have included these sustainable targets, in the wake of the recommendations of the code of conduct; in the United Kingdom , the diffusion of these objectives concerns 76.8% of companies, while in the USA the presence is residual (14%). It is very interesting to note that the most widespread objectives concern the issues of diversity (48.5% FTSE-MIB), emissions (prevalent in France and the UK) and those of employee safety and health.