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Do Board-Level Sustainability Committees Impact Company Performance?

Academics

Do Board-Level Sustainability Committees Impact Company Performance?

Is it beneficial for corporate boards to continue to adopt and dedicate resources to sustainability committees when early findings from academic research have shown these committees have little to no performance impact? New research indicates yes. Bentley University Ph.D. Candidate Jenna Burke, along with co-authors Professors Rani Hoitash (Bentley University) and Udi Hoitash (Northeastern University), explore this topic in a paper to be published in the Journal of Business Ethics. 

Like many sustainability initiatives in modern corporations, some view the adoption of board-level sustainability committees as a mere symbolic action to appease disgruntled stakeholders and don’t believe they increase company performance. The authors found opposite results when they examined more than 1,200 sustainability committees during the period 2003-2013. They found evidence suggesting:

  • Companies can benefit from adopting committees that are relevant to their business model and focused on specific stakeholder groups.
     
  • Performance impacts vary with the stakeholder focus of and resource dedication to the committee, as well as the industry sustainability landscape
    • For instance, a committee focused on safety issues at an airline company benefits employees and consumers, while a committee focused on environment issues at a coal company mostly benefits the environment.
       
  • The most effective committees are larger in size, made up of independent directors, and meet on a more frequent basis.

“When a committee is relevant to business and industry needs, it is able to satisfy stakeholders and shareholders alike by pursuing sustainability opportunities and protecting value from risks,” explained the authors. “Our research provides support for public companies to consider board-level sustainability committees as a mechanism to improve sustainability performance.”

The paper will appear in a forthcoming issue of the Journal of Business Ethics and is also available to download here.

BENTLEY UNIVERSITY is one of the nation’s leading business schools, dedicated to preparing a new kind of business leader – one with the deep technical skills, broad global perspective, and high ethical standards required to make a difference in an ever-changing world. Our rich, diverse arts and sciences program, combined with an advanced business curriculum, prepares informed professionals who make an impact in their chosen fields. Located on a classic New England campus minutes from Boston, Bentley is a dynamic community of leaders, scholars and creative thinkers. The Graduate School emphasizes the impact of technology on business practice, in offerings that include MBA and Master of Science programs, PhD programs in accountancy and in business, and customized executive education programs. The university enrolls approximately 4,200 full-time undergraduate, 82 part-time undergraduate, 1,000 graduate and 24 doctoral students. Bloomberg BusinessWeek ranks Bentley among the top 10 undergraduate business programs in the country. The Princeton Review’s Annual Best Colleges Guide names Bentley number one in the nation for career services and internship opportunities. Bentley is accredited by the New England Association of Schools and Colleges; AACSB International – The Association to Advance Collegiate Schools of Business; and the European Quality Improvement System, which benchmarks quality in management and business education.

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