As the BP oil spill in the Gulf of Mexico heads into its 2nd month and shows no sign of abating, the question that arises is - should sustainability functions and decision-making lie with the CEO, the Board, or an executive level committee? The argument for bringing sustainability under Board and top management oversight is an old one. The GRI has measures that ask companies to disclose top management involvement on sustainability matters. However, in most companies the 'sustainability' role is moved to a separate department or officer, albeit reporting directly to the CEO. While this might seem like a good idea because it allows for the centralization of all sustainability initiatives, it has its challenges.

Often times, sustainability departments restrict their own mandate to developing annual sustainability reports. While the need to gather and disseminate information is a natural progression for any new department within a large corporation, the progress and integration sustainability cannot be restricted to reporting alone. But in a scenario where a company has a separate 'Sustainability Department' or a 'Chief Sustainability Officer', adoption of sustainability within the corporate hierarchy is stymied by the lack of personnel to support all of the department's initiatives. Additionally, in many instances it is not clear to the rest of the organization if there is any commitment from the top. A CEO letter in a sustainability report does not a mandate make! The result is that sustainability efforts tend to fall under the purview of marketing or corporate communications and turn into a branding exercise. It is not surprising then that BP rebranded itself as a renewable energy provider when less than 10% of its portfolio was invested in renewable energy.

In light of these hurdles, the mandate for sustainability should rest directly in the hands of the CEO. Furthermore, her/his compensation should be tied to the success or failure of sustainability measures adopted - just like other financial or operational measures. There are two primary reasons why sustainability should rest with the CEO. (i) S/he is among the few people in the organization who has a broad and complete understanding of the business and how it should grow, innovate, and mitigate firm-wide risk. (ii) Any initiative driven directly from the CEO's office will have the priority and the sense of urgency required to make it succeed and be adopted at an organization-wide level.

link: http://www.csrwire.com/csrlive/commentary_detail/2499-A-Sustainability-Mandate-from-the-Top