Boards play crucial role in driving social sustainability

Effective governance and strong leadership are essential for embedding this agenda into the DNA of an organisation. By LEE SZE YENG, member of the Governing Council of the Singapore Institute of Directors, and Managing Partner, KPMG in Singapore.

IN THE evolving sustainability landscape, environmental, social and governance (ESG) factors take centre stage, with the social dimension now seeing more prominence. 

Social sustainability, as defined by the UN Global Compact, is about identifying and managing the impact of business on people and communities. A business’ social licence to operate depends on its social sustainability efforts. 

Global initiatives like the UN’s 2030 Agenda for Sustainable Development envisage peaceful, just and inclusive societies based on equitable growth. Locally, the Forward Singapore agenda calls for businesses and communities to work together to build resilience, equity and inclusivity. 

Boards of directors play a crucial role in driving social sustainability within organisations. 

While government frameworks like the Sustainable Philanthropy Framework and ESG Playbook for Charities provide guidance, real progress requires boards to integrate social sustainability into their core business strategies. Social sustainability should be viewed as both a fiduciary duty and a business necessity. This approach strengthens societal bonds, mitigates risks, enhances brand loyalty and ensures long-term financial stability – and is in the best interests of the company. 

However, challenges remain. 

Companies face a proliferation of frameworks for measuring social outcomes, which can create confusion. Boards can simplify this by adopting a structured approach. Firstly, effective governance and strong leadership are essential for embedding social sustainability into the DNA of an organisation. Boards must balance short-term financial objectives with long-term societal goals. Reframing social initiatives as strategic investments (rather than cost centres) can link social sustainability efforts to measurable business outcomes. 

For example, integrating ESG considerations into decision-making ensures that companies stay aligned with stakeholder expectations and societal needs. 

Secondly, transparency is another cornerstone of effective governance. Boards must adopt standardised reporting frameworks (eg, guidelines from the International Sustainability Standards Board) to provide consistent and credible disclosures. Transparency builds trust with stakeholders, strengthens a company’s reputation, and positions it to meet regulatory and market expectations. 

This helps avoid “impact washing,” where companies exaggerate their contributions to social or environmental goals. Rigorous validation processes, including third-party audits, can further enhance accountability. 

Thirdly, boards should focus on internal governance. While diversity, equity and inclusion (DEI) programmes have slowed in some countries, with some corporations adjusting their DEI strategies, many continue to advocate for the importance of equal opportunities, diversity and inclusion, citing both ethical considerations and tangible business benefits. 

Clear policies on ethical supply chains are another priority. These reduce operational risks while building trust with stakeholders, ensuring accountability throughout the value chain. 

Leadership plays a decisive role in driving these efforts. Boards must set clear goals, articulate a vision for social sustainability, and integrate it into the company’s purpose and strategy. 

Ethical leadership ensures these values cascade throughout the organisation, influencing every decision. Open and transparent communication builds trust with employees, investors, and other stakeholders, fostering alignment and engagement.

Innovation offers companies powerful tools to create and scale social sustainability efforts. 

Advanced technologies like artificial intelligence (AI) and machine learning can identify and address societal challenges. AI analytics, for example, can process large datasets to uncover gaps in education, healthcare, or economic access. This enables companies to focus on areas of greatest need, delivering targeted and efficient interventions. Digital platforms can also expand access to essential services for underserved populations, helping businesses reach new markets while fostering social progress. 

The circular economy is another innovative approach that is gaining traction. By reusing resources and minimising waste, businesses can reduce environmental impact while creating jobs and driving cost efficiencies. Such initiatives build resilience in local economies and align closely with sustainability goals. 

Collaborations and partnerships further amplify the impact of innovation. Businesses working with social enterprises, nongovernmental organisations (NGOs) or public-sector organisations can leverage shared expertise to tackle complex issues. For instance, a company might partner with an NGO to deliver education technology in rural areas, combining technological capabilities with local knowledge. 

An entrepreneurial mindset is equally important for leadership. By thinking creatively and embracing risk, boards can identify innovative solutions to social challenges. For example, impact-oriented thinking might lead a company to develop products or services that address societal needs, such as affordable healthcare solutions or renewable energy technologies. This approach not only drives social progress but also opens new revenue streams, aligning business success with societal impact.

Boards have a pivotal role in integrating social sustainability into corporate strategy. They can create meaningful and lasting change by harnessing innovation, prioritising good governance, and demonstrating strong leadership. Companies that embrace this approach strengthen their competitive position, build trust with stakeholders and contribute to a more equitable and sustainable future.

Singapore’s vision of an inclusive and resilient society offers a clear path forward. Businesses that align with this vision not only meet societal expectations but also secure their place as leaders in a rapidly changing world. With effective board leadership, social sustainability can become a driving force for success.