We are all aware of the importance of looking after our planet, but how far are businesses really taking it? One particular business has taken its commitment to being ecologically-friendly a step further than most, and is encouraging other businesses to follow suit.
Faith in Nature is an ethical, vegan company that produces a variety of personal care and hygiene products. The company recently appointed a Nature representative to the board of directors in order to minimise the prospect of any harmful impact of its business operations on the environment.
So what exactly does this entail, and how can other businesses adopt a similar approach?
Expanding the board of directors
Traditionally, a business will have a board of directors that oversees the management and direction of the company. Executive directors have a wealth of knowledge and experience within the industry and work for the business, whereas non-executive directors have no direct management responsibilities but have a large amount of knowledge in their sector, acting as independent advisors.
A Nature representative would usually be appointed as a non-executive director because impartiality is crucial in this role. They should have specialised expertise of environmental practices, specifically within the area in which the business needs support and the representative should also be kept up to date with developments within both the business and the industry itself.
From a legal standpoint, appointing one named individual as a Nature representative is more straightforward, but a business may choose to appoint multiple representatives, or comparably, allow one individual to be supported by a team. The benefit of the latter is that the business gains expertise from a number of different people.. This supporting team may be purely engaged on an advisory basis, but they may also be granted permission to vote in the Nature representative’s absence.
This should all be agreed upon via a special resolution to amend the Articles of Association, and be passed by a majority of at least 75% of voting members of the current board.
The roles and responsibilities of a Nature representative
The main role of the representative is to act as a ‘voice of Nature’ when the board is making decisions about both the strategic direction of the company and in terms of day-to-day operations. Although any ecological impact of business activity may already be considered to a point, the expertise of the representative can give additional weight to the company’s green credentials.
This representative may be present for all decisions that the board makes, but the business may choose to only consult them when an issue has the potential to cause a greater impact.
Commonly, each director on the board is allocated one vote for each decision, so the business may decide to continue this structure for the Nature representative also. If larger importance is placed on environmental responsibilities, the representative may be allocated more. The decided number of votes must also be documented within the company’s Articles of Association.
Accountability and documentation
Of course, the board have the growth and success of the business at the forefront of their minds, and so it stands to reason that if the Nature representative is true to their own role, there may be some disagreement about what is best for business and what is best for the environment.
This presents no legal concern, but the board should ensure that their balanced and comprehensive grounds for decision-making are properly documented. This evidence does not need to be made public, but if the business has announced its commitment to environmental concerns, then it may want to be fully accountable to avoid accusations of green-washing.
It’s likely that the business already produces annual reports detailing the successes of the past twelve months, but with a Nature representative involved, these reports could also include the environmental changes and challenges that have arisen. If it is the role of the representative to write these reports, this should be formally documented when they are appointed.
Progressing with Nature on the board
Clients and consumers are increasingly prioritising companies that are taking genuine steps towards environmental care. Appointing Nature to the board can be a successful way of relating to the many who value environmental issues when making a purchase. However, in no circumstances should a Nature representative be used as a quick public relations win.
Before making bold changes to the structure of a business, it’s advised to seek professional legal advice in order to pre-empt any potential issues or concerns that could arise in the future as a consequence.
John Roberts is a Partner and Director at Austin Lafferty Solicitors. John has been with the firm for almost 20 years, with experience in all areas of business law.