Asking the right questions
How board members in the natural resources sector can enable enduring and positive social, environmental and economic outcomes
Questions Boards Should Ask (QBSA) is a white paper produced by the Social Practice Forum (SPF) to help board members within the natural resources sector, but it is applicable to a much broader base.
The guidance follows concern by Forum members in response to major environmental, social or governance disasters in the sector, and exasperation wondering 'How could the board not know about that?' Only to then reflect, 'Maybe the board doesn’t know what to ask about social issues'.
Let’s remember that the board’s key purpose 'is to ensure the company's prosperity by collectively directing the company’s affairs, while meeting the appropriate interests of its shareholders and relevant stakeholders', as defined by standards for the board from the UK’s Institute of Directors.
Meanwhile, the SPF defines social performance as 'the sum of a company’s interactions, activities and outcomes that can affect stakeholders'. Social performance refers to the ability of an individual, organisation, or system to effectively manage and address social issues and impacts. It involves how well actions and policies align with social goals, values and expectations, and how they contribute to the wellbeing of people, communities and society as a whole.
Activities and focus areas and how they relate to social performance are illustrated in the image below.
The QBSA document has been developed as a resource for board directors to help them execute their responsibilities in relation to social performance. It begins with key questions about an individual board member’s role and accountability on social performance. These are followed by questions relating to corporate culture and specific social legacies – as such legacies go hand-in-hand with corporate culture.
Subsequent queries address elements of social performance management that a company must have to manage effectively its interactions with, and responses to – its social context. The final questions relate to the social issues and themes that usually provide the greatest social risk exposure (see box-out below).
These questions are a tool for the board of directors to analyse the social balance sheet of a company or organisation, acknowledging the complexity of the social systems it operates in. They have been developed to address the corporate governance responsibilities of directors, not those of executive managers. They are meant for boards of directors, advisory boards and internal oversight bodies (e.g. an oversight panel established by joint venture partners).
In the experience of the SPF, social problems are essentially predictable and preventable. Manifestations of social risk are context-specific, but underlying causes are less so and can affect schedule, cost and reputation, and contribute to social wellbeing.
Considering the types of social issues that impact businesses, the aim was to codify hard-earned experience into a set of prompts for people who are both running companies and for those who are wondering how companies should be run.
The aim of QBSA is to help instill a culture – supporting a tone of how businesses are operated. The SPF also sees an opportunity in supporting training schemes for board members that are recognised by professional associations and to engage with the investor community.
If QBSA has one purpose, it is to ensure social practice gets put on the agenda at the board level when things are going well for a project, not only after things go badly.
