Crafting sustainable leadership: A governance checklist in action

Having spent over a decade working within large organisations in senior sustainability roles, I’ve had the privilege, and at times the misfortune, of seeing governance at its best and worst. Governance is more than the mechanics of oversight or compliance; it is the framework that ensures organisations act ethically, responsibly, and sustainably. In a rapidly changing world, where expectations for transparency and accountability are soaring, governance provides the foundation for long-term success. Drawing on insights from my book, How to Build Sustainability into Your Business Strategy, as well as personal experiences, I’ll explore the essential elements of good governance, including its power to drive sustainability, unlock opportunities, and mitigate risks.

Governance: A framework for sustainability

Good governance begins with recognising that sustainability is no longer optional; it is integral to an organisation’s success. In my book, I outline the characteristics of effective governance: a diverse and informed board, transparent accountability mechanisms, and a commitment to integrating environmental, social and governance (ESG) principles into strategic decision-making. Governance must extend beyond the boardroom, shaping an organisation’s culture, operations, and relationships with stakeholders.

One pivotal moment early in my career involved working with a board deeply resistant to addressing climate change. Their position was that climate concerns were irrelevant to their industry, a perspective that put the organisation at odds with growing societal expectations. To drive change, I reframed the conversation. Rather than focusing solely on environmental responsibilities, I demonstrated how sustainability could deliver tangible business benefits, such as cost savings, reduced risks, and improved operational efficiency. This reframing not only shifted the board’s mindset but also unlocked new opportunities for the business. With a robust sustainability strategy in place, we gained a significant edge in client engagements. Prospective clients valued our ESG credentials, and I saw firsthand how these efforts helped our sales teams win contracts and build lasting relationships based on trust and alignment of values.

Learning from tragedy: Rana Plaza and the need for oversight

The devastating collapse of the Rana Plaza factory in Bangladesh in 2013 is one of the most harrowing examples of governance failure. Over 1,100 workers lost their lives due to unsafe working conditions in a supply chain feeding multinational brands. This tragedy highlighted the urgent need for governance frameworks that extend to third-party relationships, ensuring accountability across complex supply chains. Companies associated with such disasters not only faced immense reputational damage but were forced to re-examine their governance and sustainability practices.

The Rana Plaza incident serves as a powerful reminder for Australian companies with offshore supply chains. It emphasises the need for rigorous supplier audits, ethical sourcing, and comprehensive ESG reporting to safeguard both human lives and corporate integrity. Incorporating these principles into governance structures is not only a moral imperative but also a strategic necessity in today’s global economy.

The “Good Governance Checklist” in action

To help organisations navigate the complexities of governance and sustainability, I developed a “Good Governance Checklist” that highlights the essential components of effective oversight. These include:

• a diverse and skilled board actively engaged in ESG issues
• integration of sustainability into board agendas, charters, and strategic discussions
• mechanisms for regular performance reviews and transparent reporting
• active stakeholder engagement, ensuring alignment with societal expectations
• incentives that hold executives accountable for achieving sustainability goals.

This checklist is not theoretical; it has proven effective in practice. During my tenure at Fujitsu, the team applied the Japanese cultural practice of nemawashi, or consensus-building, to gain support for embedding sustainability into board-level strategies. By involving stakeholders early and building alignment around shared goals, we were able to implement significant changes that delivered both environmental and commercial benefits.

Transparency and innovation

Transparency in ESG performance is a cornerstone of good governance. Frameworks like the Global Reporting Initiative (GRI) and external certifications such as The Science Based Targets Initiative (SBTi) offer tools for businesses to communicate their sustainability progress credibly. Yet governance must also evolve to address emerging challenges, such as the ethical use of artificial intelligence (AI). As companies adopt AI to streamline ESG reporting and risk management, they must ensure that their governance frameworks address concerns like data privacy, algorithmic bias, and the ethical implications of automation.

What has become increasingly clear in my work is that governance is not just about mitigating risks, it’s about unlocking potential. A strong governance framework can drive innovation, open new markets, and strengthen relationships with stakeholders. For instance, our ability to demonstrate measurable ESG outcomes not only satisfied regulatory requirements but also appealed to clients who prioritised sustainability in their procurement decisions. This alignment of values proved to be a decisive factor in securing long-term partnerships.

The Australian context: Leading the way

In Australia, governance practices are increasingly shaped by local regulations, such as the Modern Slavery Act, as well as global frameworks. More recently, the upcoming Australian Sustainability Reporting Standards (ASRS) are seen by many organisations as a compliance burden. However, having worked with New Zealand organisations over the past two years as they implemented similar mandatory reporting legislation, I’ve seen how those that view these requirements as an opportunity rather than a box-ticking exercise reap significant benefits. By embracing these frameworks, companies have strengthened their resilience, built competitive advantage, and enhanced their market credibility.

The ASRS offers Australian organisations a similar opportunity to go beyond compliance and demonstrate leadership. Companies that proactively adopt transparent reporting and robust governance practices can build stronger stakeholder trust, align with global sustainability trends, and position themselves as leaders in an increasingly ESG-conscious marketplace.

Conclusion

Governance is not merely a compliance exercise; it is the foundation of sustainable leadership. The lessons of the Rana Plaza tragedy serve as a stark reminder of what can go wrong when governance fails. Poor oversight, neglect of stakeholder welfare, and a narrow focus on cost-cutting can lead to irreparable harm to human lives and reputations. As we look to the future, we must ensure that such incidents are never repeated.

By adopting a “Good Governance Checklist” and embedding ESG principles into their frameworks, organisations can drive accountability, innovation, and resilience. When governance aligns with sustainability, businesses not only safeguard their own futures but contribute to creating a world where tragedies like Rana Plaza are a thing of the past. Let us use the tools at our disposal, from the ASRS to global best practices, to ensure that governance becomes a force for good one that protects people, the planet, and prosperity for generations to come.

Lee Stewart is the CEO of ESG Strategy and a seasoned sustainability leader with over two decades of experience guiding businesses toward integrating sustainability into their core strategies. As the author of How to Build Sustainability into Your Business Strategy, he is passionate about equipping leaders with practical frameworks for embedding environmental, social, and governance principles into organisational resilience and success.