Governance

Governance is the set of organisational structures, policies, procedures and control mechanisms through which a company directs, oversees and is held accountable for its activities. In the context of sustainability, it is the G in ESG criteria (environmental, social and governance) and defines who makes decisions, on the basis of what information and with what accountability for environmental and social matters.

Governance in sustainability covers issues such as business ethics, anti-corruption, the composition and diversity of governing bodies, risk management and transparency. Together with social aspects and environmental aspects, it forms the backbone of corporate sustainability.

Why governance matters

Strong governance is what differentiates a genuine sustainability commitment from a mere statement of intent. It is essential for several reasons:

• Data accuracy and reliability: establishes clear protocols for collecting, analysing and verifying information, essential for accurately measuring the carbon footprint and setting realistic targets.
• Transparency and accountability: defines how results are communicated to investors, customers and regulators, strengthening trust.
• Regulatory compliance: helps respond to increasingly demanding regulations and avoid penalties.
• Competitive advantage: attracts responsible investors, customers and talent committed to sustainability.

Governance in the regulatory framework

Sustainability governance has moved from voluntary to regulated. The Corporate Sustainability Reporting Directive (CSRD) requires companies to describe how their governing bodies oversee sustainability matters. Within the European Sustainability Reporting Standards, the standard ESRS G1 on Business Conduct covers aspects such as ethics, corporate culture, anti-corruption and supplier relationship management. Governance is also the foundation of materiality assessment and overlaps with corporate social responsibility (CSR).

Key elements of good governance

Senior management commitment

The board of directors and management must treat sustainability as a priority, allocate resources and set ambitious yet achievable targets. Without top-level involvement, commitments rarely translate into action.

Sustainability committee and allocation of responsibilities

Many companies establish a sustainability committee or designate a dedicated officer (for example, a Chief Sustainability Officer) and distribute specific responsibilities across departments, ensuring sustainability does not fall into a grey area.

Policies and procedures

A formal policy documents the company's commitment to measuring and reducing its emissions, and defines the scope, objectives and timelines. Procedures should be based on recognised standards such as the GHG Protocol, which distinguishes between Scope 1, Scope 2 and Scope 3 emissions.

Data management, verification and communication

A robust data management system ensures the integrity and traceability of information. Independent third-party verification adds credibility, and the company must communicate its results transparently, typically through the sustainability report.

Environmental governance

When governance focuses specifically on the ecological dimension (resource management, emissions, biodiversity), it is referred to as environmental governance, an increasingly relevant subset within corporate governance.

At Manglai we help companies measure their carbon footprint and prepare their sustainability information, providing their governance with reliable and verifiable data. Discover how Manglai can help you.