Why Govern for Sustainability?

I’ve been slow to populate the governance section of this website.  It’s not out of any sense that governance is unimportant.  I’ve spent a lot the last twenty years helping organisations with things like strategic planning, policies and procedures and compliance.  Ten years ago I even wrote a governance manual for smaller community housing organisations, although sadly it was never kept up-to-date and fell out of use. 

Nonetheless, when I read documents about governance I often feel like I’m walking through mud.  I can read pages of material and have no idea what I just read.  What do they want board members to do, again?  It’s a field that can be easily mired in jargon and vagueness, almost as if it was purpose-built to confuse.

In the last couple of months I’ve finally bitten the bullet and spent some time reading about the intersection between governance, sustainability and climate change.  I want to present some of it in a short, hopefully jargon-free series of articles about governing for sustainability.

What is Governance?

I may well have lost some people already by using the word ‘governance’ – it certainly took me a while to understand what people mean when they use the term, and I still see it as a term that means different things to different people.  If you don’t share my confusion you might just want to skip this section.

Governance is the task of overseeing the running of an organisation, ensuring that it can fulfil its purpose.  It is primarily the job of the Board (Management Committee for associations) assisted by the Company Secretary, CEO and management team where the organisation is big enough to have one.  Key governance tasks include:

• Setting the organisation’s strategy – short, medium and long term.

• Overseeing the finances to ensure that it the organisation is solvent and financially sustainable.

• Setting the risk appetite (how much risk the organisation is prepared to take) and ensuring risks are properly managed.

• Making sure the organisation complies with the various laws and regulations that apply to it.

• Leading the organisation’s culture.

How each organisation does these things can vary, but this is the core of what it means.

What is Sustainability, and how does it relate to climate change?

If governance is a somewhat murky term, sustainability has so many meanings that I hesitate to use it.  I could write a whole essay just about this term, but it would be boring and frustrating.  Let me just break it down a little. 

Firstly, the term can either refer to the organisation, or to the wider community and natural environment.  These two things are linked, as the organisation is part of the community and the environment.

For the organisation, sustainability is about its ability to survive and go on doing its business.  The term is often used in a purely financial sense – does its income exceed its costs, can it afford to maintain its assets over the medium to long term, does it have the financial reserves to withstand shocks?  However, other things also impact its sustainability.  It needs to ensure it remains legally compliant.  It also needs to maintain its reputation in the wider community to ensure ongoing community support, its reputation for quality service to meet its mission, and its employment and management practices so that it continues to meet its core social objectives.

Climate change presents risks to a housing or homelessness organisation in all these areas.  It creates extra costs, for instance in responding to climate-related disasters or in increasing insurance premiums.  It creates risks for the organisation’s clients through increased heat, disaster risk and changes to the livability of their housing, and a failure to adapt can lower the quality of service.  It impacts an organisation’s staff in similar ways and the organisation may need to change its employment practices to adapt to climate risks.  It also presents opportunities for an alert organisation to get on the front foot, grasp funding opportunities for adaptation or to contribution to climate mitigation, and play a role in wider community responses.  Doing these things well can enhance the organisation’s reputation, doing them badly or not at all can damage it.

Sustainability is also, or course, used to refer to the local, national and global environment.  Can we shift the way we live and work to avoid overrunning the earth’s capacity to support us and the other species with whom we share it?  How can the organisation contribute to this shift?  It can be tempting to think that these issues are two big for our small organisation, but ignoring them makes us part of the problem and can feed back into our reputation.  There are a number of avenues through which organisations can contribute to greater sustainability, including power use, transport and fleet choices, procurement policy, waste management and for housing organisations their design and construction choices.

The Role of Governance in Sustainability

Future articles in this series will talk in more detail about government for sustainability.  Just to give you a feel for it, consider the list of governance tasks from earlier in this article.

• The Board can articulate a strategic intention towards sustainability, including addressing climate issues.

• It can ensure the organisation factors in the costs of climate adaptation and mitigation efforts, and the potential savings or income streams from taking action.

• It can ensure the organisation assesses its climate risks and takes appropriate mitigation actions.

• It can ensure that it keeps abreast of the changes in regulations that come as a result of climate change, and changes its own processes accordingly.

• It can set a culture which rewards initiatives that promote sustainability and encourages people throughout the organisation to think about this question.

In short, it’s about managing risk, about taking opportunities, about delivering on our purpose in a changing world and about being good corporate citizens. 

Stay tuned for more!

Resources

The Australian Institute of Company Directors has a range of resources on climate risk management.   They did a ‘temperature check’ on progress on climate governance in 2024 - see it here.  Broader information on the Climate Governance initiative for which AICD is the Australian chapter of an international initiative, is here.  They have a set of NFP Governance Principles which include Sustainability as Principle 7.