Board members of for-profit companies have a duty to link their organizations’ long-term performance to societal goals, a new report says.
Integrating social concerns into corporate strategy has the dual benefit of strengthening a company’s competitiveness while bolstering the society in which it operates, says the study from the Committee for Economic Development.
“Now is the time for the business community to think seriously about its interdependent relationship with the broader society,” William Donaldson, a trustee for the committee and former chair of the Securities and Exchange Commission, says in a statement.
The report outlines several recommendations:
* Corporate directors should consider how societal issues affect the organization’s long-term performance.
* Boards should ask management to evaluate societal concerns and recommend how to respond.
* Directors should ask management to report regularly on its societal performance.
* Directors should value the company’s communication with shareholders on issues that affect the organization’s brand and reputation.
* Boards should encourage honest reporting effects of the risks and opportunities of the company’s societal interactions.
* Boards should link executive compensation for performance on societal goals
The Committee for Economic Development, a coalition of more than 200 business and university leaders, works to promote sustained economic growth for all Americans.