Overview

The inherent flexibility of advisory boards means the structure can be adapted to support a variety of business priorities.  The most effective advisory boards are built upon a robust and well considered best practice foundation, then tailored to fit the particular needs or use case of the organisation.  In this series, we explore the various use cases of advisory boards and key considerations for implementation and facilitation.

Each situation is unique and the information provided is general in nature.  If you are looking to implement an advisory board for the first time, or are searching for support to enhance the effectiveness of your existing advisory structure or governance system, we strongly recommend engaging the support of a Certified Chair™️ .  Our tailored Advisory+ service can help connect you with the right advice for your organisation.

WHAT IS AN ADVISORY BOARD?

Advisory boards are a structured collaborative method for organisations to engage external advisors. The structure, role and operation of an advisory board is influenced by the organisation’s:

• Operating environment
• Legal requirements
• Strategic direction
• Leadership system
• Available resources
• Capacity and capability
• Regulatory environment

How can advisory boards support SUSTAINABLE BUSINESS PRACTICES?

Traditionally, key drivers for advisory boards were to explore strategic thinking for growth and succession planning. In today’s business landscape it’s different. Increasingly, advisory boards are formed to navigate the current environment with increased complexity, as well as transform the organisation with a sustainable lens. For this to work, organisations need to address many competing factors to survive and thrive including addressing margin compression with rising costs, reshaping business models and gaining access to market opportunities just to name a few.

Sustainability is a broad reaching concept and affects every aspect in business. Every organisational context is different including push and pull motivations. This dictates the strategic approach to address both the threat (push motivations) and the opportunity (pull motivations).  While an organisation may have a dominant priority, often their strategic focus for sustainability will include a combination of push and pull motivations.  The ability to explore optionality, and the potential consequences, is a common focal point for sustainability advisory boards.

PUSH motivations

Sustainability of the business operations, and license to operate, often requires an organisation to evolve quickly to survive.

Navigating the rising cost of energy is one example of an organisation responding to a push factor..  The Global Energy Outlook data produced as an outcome of the 28th Conference of the Parties (COP28) in 2024, world leaders agreed to “transitioning away from fossil fuels in the energy system.” Under all scenarios evaluated, global electricity demand in all its forms is still projected to grow substantially and will impact business sustainability for the longer term.¹

Consider these other examples:

• License to Play: Environments where organisations must adapt to the current environment to stay in the race. Consider organisations or sectors with specific requirements to tender or quote for business with specific sustainability requirements. This is common in regulated environments where there are new requirements to have a “license to play”.
• Regulations: Mandates placed on sectors as a requirement including reporting,
• Cost Pressures: Margin compression based on rising costs including employment, energy, premises are common examples creating financial and cashflow pressure, reduced investment and ongoing viability of being in business.
• Availability of Capital: rising interest rates, lower risk appetites of funders, decentralised access to funds and increased businesses in administration
• Succession Planning: the aging population of business owners and availability of employees and next generation creates pressure inside the family business sector.
• Evolve or Fold: fluid changes in consumer behaviour and expectations force business models to change or exit. Maintaining bricks and mortar and creating omni channels may increase the cost base to meet the changing market behaviour.

PULL motivations

Evolving quickly to innovate and positively embrace new opportunities can create a strong pull towards sustainable business practices.

Proctor and Gamble is well known example, where the Head of Sustainability ensures the executive have an opportunity to embrace external thinking and input into their broader sustainability strategy via an advisory body. They call it, “bringing the outside in.”

Consider these other examples of pull motivations:

• Innovate to Transform: harnessing and investing in new technologies and opportunities to gain a competitive edge and re-shape business operations and the market.
• Increased efficiency and cost savings: investments where there will be a greater long term business performance, profitability and return through either revenue generation or cost savings.
• New Stakeholder Engagement Models: alignment of opportunities across a supply chain, with customers and the broader business eco-system, creating brand loyalty and stronger business opportunities.
• Embracing Digital, AI and Tech Driven Transformation: embracing new ways of doing business, to strip costs, gain efficiencies and create better client experience and outcomes.
• Positive Impact Cultures: Harnessing the alignment of employees values and the organisation with a purpose led organisation.
• Social License: Minimise Social and Environmental Impact. Social impact organisations, bringing social and environmental considerations into the core purpose of the organisation. Stakeholder needs are deeply held including employee link to purpose, customers and the broader business and social ecosystem.
• Emerging Opportunities: New business models and opportunities created from new economic drivers.
• Incentives: government grants, tax breaks and supply chain incentives create stimulus for change and adapting to sustainable business practice.

Organisational CONSIDERATIONS

There are many ways an organisational can use advisory boards to bring objectivity and a fresh approach by “bringing the outside in” to support critical thinking in consideration of sustainable business practice.  The ABF101 Advisory Board Best Practice Framework highlights key organisational considerations aligned to the best practice principles.  While all options need to be carefully considered for a particular use case and operating environment, the following list provides a starting point for your discussions:

1. What are the needs of the organisation today?

2. What are the drivers including the push and pull motivations and what impact do they have on the organisation and stakeholders?

3. What are the business case considerations? (timing, revenue, profit, budget, reputation, regulations, stakeholders)

4. How could an advisory board and external input help you achieve your short and long term goals?

5. Any other specific considerations related to your organisations strategic priorities or operating context.

REFERENCES

¹ https://www.rff.org/publications/reports/global-energy-outlook-2024/#:~:text=Global%20electricity%20demand%20is%20projected,percent%20or%20lower%20by%202050.