According to acclaimed researcher and author Brené Brown, being vulnerable can be a strategic asset to any organization. Although this may sound counterintuitive to some, Brown made the case for how vulnerability cultivates innovation to a rapt audience of directors and corporate-governance professionals gathered at the 2017 NACD Global Board Leaders’ Summit.
Brown became an Internet sensation after she discussed her academic research on these themes at a TEDxHouston event in 2010. Although her presentation was enthusiastically received by her in-person audience, she was frustrated by negative online comments left on the video. But soon after, she discovered a quote by President Theodore Roosevelt that not only has reframed how she viewed her experience, but also has guided her subsequent work:
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
Brown then identified the following four qualities that, when operationalized within an organization, will create a culture of courageous leadership:
Vulnerability. Based on Brown’s research, there is no job where a person is not vulnerable. She noted that vulnerability is not the same as cowardice. Rather, it’s the willingness to expose your new ideas to public scrutiny. Without trying to do something new, and risking the possibility of failing horribly, progress can never happen.
Courage. It takes courage to compete in business. Luckily, Brown’s research into the behaviors of 80 senior leaders and more than 300 MBA students demonstrates that courage is a skill that can be taught and measured. She recommends four practices to instill a culture of bravery in an organization: (1) encouraging vulnerability, (2) defining the organization’s values and operationalizing those values, (3) inculcating trust between individuals and teams, and (4) empowering people with “rising skills,” or the skills to pick one’s self up and brush one’s self off after failing. Regarding rising skills, Brown pointed out that if your employees cannot recover from and learn from their failures, they will begin to feel that they need to be on the defensive—a mind-set that can hinder creativity and innovation.
Ethics. One of the most difficult situations a person can encounter in a business setting is standing up to someone who is making unethical choices. According to Brown, ethics should be the grounding framework that drives behavior. When someone acts outside the set of ethics that the organization adopts or outside the law, leaders must be brave enough to call out that person’s missteps. Her point holds particular relevance to directors and executives who are responsible for overseeing business ethics and promoting a culture of ethical performance.
Trust. Brown asked the audience, “If you can’t see a person’s vulnerability, will you ever be able to trust them?” Vulnerability is a key to building trust, and top-performing teams rate trust in their coworkers as the deciding factor for success.
Brown noted that people who lack trust in one another are likely to avoid confronting their fears and anxieties. Trust makes workers brave enough to develop and share their ideas, and allows them to discuss failures in a respectful manner.
“Can innovation come without exposure?” Brown asked. “Can you have innovation without vulnerability? No. It doesn’t exist.”
Learning how to implement sustainable business practices can be challenging for companies in any industry, and boards may wonder how to integrate sustainability issues into discussions with management. NACD has compiled a set of resources offering practical information to help boards discuss climate-related risks, as well as opportunities associated with environmentally- and socially-sustainable business practices.
The first step is to assess why sustainability and social responsibility are such hot topics for the boardroom. Two important factors to consider are the political environment and shareholder expectations.
Signals From the Current Administration
President Donald J. Trump in June announced that the United States would be withdrawing from the Paris climate agreement, an international deal in which 191 countries have pledged to work toward goals to restrict the increase in temperatures globally to less than 2.0°C and reduce the amount of greenhouse gases being created.
The president in April also signed an executive order aimed at “promoting energy independence and economic growth,” curtailing federal environmental regulations. The order instructs the Department of the Interior to lift former President Obama’s ban on coal leasing activities on federal land.
Watchdog group Environmental Integrity Project recently reported that this year, the Trump administration, when compared to the prior three presidential administrations in the same period, has collected approximately 60 percent less in fines from companies’ violations of pollution-control regulations.
Opposing Pressure From Shareholders
Despite strong signals from the current administration that enforcement of environmental-related regulations will decrease over time, shareholders are applying an opposing pressure on corporations.
More than half (56%) of shareholder proposals introduced this year on proxy ballots related to social, environmental, or policy issues, and Proxy Monitor reports that this proportion is the highest it has seen since it began tracking such data in 2006.
Shareholder proposals relating to environmental and social issues 10 years ago sought fairly basic changes such as increased clarity into companies’ environmental policies. The proposals now seek, for example, enhanced disclosures around what the company is doing to manage climate risks and how executive pay links to sustainability initiatives, the Wall Street Journal reports.
Proposals about environmental issues received a record breaking average of 27 percent support this year, according to Proxy Monitor. That percentage was 21 percent last year and fell in the teens before that.
Meanwhile, State Street Corp., a global financial services and investment management firm with $2.47 trillion in assets under management, published a report earlier this year in which they found that traditional obstacles (like the lack of quality data about ESG) to investing more heavily in companies that prioritize ESG initiative are diminishing.
“Over the long-term, environmental, social and corporate governance issues can have a material impact on a company’s ability to generate returns,” Ron O’Hanley, president and CEO of State Street Global Advisors, said in a press release.
Resource centers are repositories for NACD content, services, and events related to top-of-mind issues for directors. In these resource centers, individuals can find practical guidance, tools, and analyses on subjects varying from board diversity to cyber-risk oversight. Below we have highlighted a sample of helpful materials from our new resource center on sustainability and social responsibility.
The handbook, produced in conjunction with EY, centers around four key recommendations:
Directors should understand the company’s definition of sustainability in the context of the company’s strategy and specific circumstances.
The board and management should align on the sustainability message and information the company chooses to report publicly.
Boards should clarify roles for oversight responsibility for sustainability activities, including external reporting.
Directors need to establish parameters for sustainability reporting to the board regarding the information required to support robust discussions with management.
A number of items included in the resource center provide expert commentary on myriad issues related to sustainability and social responsibility. A favorite of mine is “Living in a Material World,” an article written by Veena Ramani, program director of the Capital Markets Systems, at sustainability-focused nonprofit Ceres.
Ramani discusses the corporate director’s critical role in engaging with management over which sustainability issues are material for the enterprise. She offers four suggestions for board members who want to address the materiality of certain sustainability risks.
Boardroom Tools & Templates
The resource center houses several tools and templates to assist directors as they oversee sustainability-related risks and opportunities. One such tool is the “Self-Assessment: Is Your Board Sustainability-Ready?” evaluation. Directors can answer a set of questions to gauge their board’s level of engagement—or lack thereof—in sustainability oversight.
Videos and Webinars
The NACD BoardVision—Sustainability Oversight video in the resource center features a candid discussion by EY subject matter experts Brendan LeBlanc and Kellie Huennekens on how investors are engaging with boards around sustainability and social responsibility issues. (A transcript of the video is also available here.)
Our hope is that you find this resource center useful and visit it often. We will continue to update it regularly with new and interesting content. If you would like help finding resources on a specific subject matter, please let us know. We welcome the opportunity to engage with directors on pressing needs and concerns.
Anyone who has ever met Brad S. Karp knows first-hand that he is a man of distinction. Recently he was celebrated for still another outstanding trait: his commitment to lifting up the women around him and supporting their paths to business leadership. The chair of Paul, Weiss, Rifkind, Wharton & Garrison was honored for his prodigious part in championing the advancement of women at the 17th annual Legal Momentum Aiming High Awards.
The 47-year-old gender rights organization provides advocacy and legal reform services to ensure the personal rights and safety for women and girls. It has been giving its Aiming High award since 2001 to women in the legal profession who work to elevate and advance the work of their sisters.
Karp accepts the Man of Distinction Award.
Karp is only the second recipient of the “Man of Distinction” award. Beginning last year led by Legal Momentum President and CEO, Carol Robies-Román, the organization made the astute decision to include men among its honorees. J. Michael Cook, former chair and CEO of Deloitte & Touche, was the first man-of-distinction honoree at the 2016 luncheon.
In addition to Karp, this year’s Aiming High award recipients are: Stephanie Drescher, global head, business development & investor relationship management, Apollo Global Management; and Lisa Garcia Quiroz, who is now president of the Time Warner Foundation and the company’s first chief diversity officer.
Drescher was introduced by John J. Suydam, chief legal and compliance officer at Apollo, who extolled Drescher’s quiet confidence, unflappability, and superior listening skills. As a leader, Drescher has displayed an innate ability to build relationships with Apollo stakeholders including management, clients, and its 989 employees in 15 offices around the globe.
Garcia Quiroz (left) and Drescher received the Aiming High award from Legal Momentum in June.
Janet Murguía, president and CEO of the National Council of La Raza, introduced her colleague and friend, Garcia Quiroz. Prior to joining Time Warner, Quiroz was at Time Inc., where she founded People en Español and Time for Kids. Murguía praised Quiroz as a cultivator of talent, particularly of storytellers.
At Time Warner, Quiroz led the creation of a company-wide talent incubator called One Fifty to identify and develop stories that would resonate with younger and more diverse audiences. “Lisa understands in her heart that greater diversity builds strength across communities,” said Murguia. “She is tireless and fearless.”
Quiroz spoke of her decision to attend Harvard Business School—rather than the law school, which would have been her father’s preference. “The universe conspired to bring me into media with a social activist heart,” Quiroz said.
Karp was introduced by his colleague, Valerie E. Radwaner, vice chair of Paul Weiss. Radwaner lightheartedly extolled Karp as “a force for feminists.” “Brad believes in gender equality and social justice issues as shown by how he leads Paul Weiss. He understands that real change only happens by bringing dozens of different voices to the table,” Radwaner said.