In the midst of volatile and uncertain economic condition, organizations are facing challenges that can present both threats and opportunities.  Therefore, business adaptability becomes vital in ensuring sustainable growth under intense competition environment.  Emphasizing only growth and financial return under capitalism concept do not correspond with the path of sustainable growth.  In some cases, businesses were stalled because they failed to take into account environmental and social impact right from the start.

Sustainability may exist when ‘business as usual’ takes into account profitability together with effective risk management as well as impacts on all stakeholders in accordance with good corporate governance principles.  Strategic planning is one essential business process that would drive business toward determined direction.  As organization leader, the Board has a major role in providing guidance to ensure corporate strategy gears toward business sustainability.  

Therefore, the Thai Institute of Directors (IOD) has prepared this Guideline in alignment with key principles stipulated in the Securities and Exchange Commission’s Corporate Governance Code for listed companies 2017 (CG Code).  The guideline divides into two sections including 1. Key Principles and 2. Guidelines. 

Key Principles of this guideline are as follows:

1.     The Board should consider and set corporate vision and purpose toward business sustainability.  It should take into account financial performance together with effective risk management as well as positive and negative impacts on all stakeholders in accordance with good corporate governance principles. The vision and purpose should be determined in collaboration with the management and communicate with both internal and external stakeholders. 

2.     The Board should establish organizational culture and values (both business and ethical values) to drive sustainable growth and lead by example.

3.     The Board should ensure integration of factors affecting sustainability, both opportunities and threats, relevant with the company’s business context.  These factors should be taken into account in the formulation of strategy for business sustainability in order to respond comprehensively to opportunities and threats in the sustainability aspects that could affect the organization and stakeholders. 

4.     The Board and the management should jointly determine short-, medium-, and long-term strategy for business sustainability to ensure appropriate achievement in each level.  It should take into account resource, innovation, technology, and other factors needed to drive other strategies to ensure target achievement. 

5.     The Board should consider building board structure and composition that can oversee strategy for business sustainability. It may assign a committee to oversee the implementation of strategy for business sustainability.

6.     The Board should support the development of directors’ knowledge and expertise through various channels, emphasizing on sustainability aspects relevant to the company’s business to ensure directors clearly understand business sustainability. 

7.     The Board should evaluate level of understanding and efficiency of strategy for business sustainability in annual performance evaluation of the Board and individual director.  The evaluation result can be used to develop and enhance Board efficiency. 

8.     The Board should build organizational structure that will accommodate strategy for business sustainability and clearly assign roles and responsibilities to relevant units. 

9.     The Board should ensure the organization has an effective stakeholder engagement process, including communications and hearings to understand expectations of each stakeholder. It should also ensure public disclosure of information gathered from stakeholder engagement through various channels.

10. The Board should ensure the management analyze and prioritize issues raised by stakeholders in order to plan appropriate response, manage risk, make improvement, and use arising opportunities to develop innovation of goods and services. 

11. The Board should conduct and review policies to accommodate strategy for business sustainability that covers environmental/economic, social, and governance aspects.  This is meant to demonstrate the Board’s intention and provide guidance for personnel, ensuring the company has a mechanism to bring policy into full implementation.

12. The Board should ensure the management allocate resources effectively and in accordance with priorities to fulfil short- and long-term strategic goals.  Such allocation must take into account impact and resource development throughout the supply chain.  Six types of resources that the company should consider are Financial Capital, Manufactured Capital, Intellectual Capital, Human Capital, Social and Relationship Capital, and Natural Capital.

13. The Board should ensure the management set key performance indicators that fit with strategy for business sustainability and the context. The Board should also set appropriate monitoring timeframe.

14. The Board should set a timeframe to monitor key performance indicators and hold meetings to follow up progress, seek information, provide direction and guidance to the management for operation improvement. 

15. The Board should ensure the organization present performance information in accordance with strategy for business sustainability through various communication channels to thoroughly inform stakeholders in a way that fit with the organization’s context.

For full "Guideline on Board's Role in Strategy for Business Sustainability"

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