Fall 2010 Steering Committee MeetingGovernance Task Force Report | 2:00-3:30

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Charter: Propose new governance structure for TSC

Chair: Jon Johnson, TSC

Members:Jerry Lynch General Mills, Inc.Pete He Henkel Consumer Goods Inc.Jay Celorie Hewlett PackardEric Israel KPMG, LLPTim Carey PepsiCo, Inc.Don Davidson Safeway, Inc.Mark Spears The Walt Disney CompanyKaren Hamilton UnileverJeff Rice Walmart

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Governance Task Force

Agenda: Future StateProcessOutcomeVote

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Governance Task Force

The governance structures that are developed should have the following characteristics• Global in scope, to appeal to companies and

stakeholders crucial to the Consortium’s growth• Credible with potential members and key

stakeholders• Enable operational efficiency and tangible results• Transparent concerning key decisions and processes

(e.g., financial management, research priorities and funding)

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Guiding Governance Principles

Three phases of TSC development• Phase I: Start-up (2009-10)• Phase II: Growth and Delivery (2011-12)

- Increase membership- Globalize- Professionalize- Deliver on Results- Plan for Phase III

• Phase III: Institutionalization and Maintenance (2013-)- Sustainable organizational structure- Independent organization

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Long-Term Plan

• To be the globally preferred provider of common data, standards and systems that improve informed decision making for product sustainability.

• To support better decision making across all relevant consumer goods sectors.

• To actively engage the world’s premier business organizations and academic institutions.

• To be well respected by the broader stakeholder community.• To be an independent organization with a sustaining business

model.• To have high membership satisfaction and retention.

Phase III Goals

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• Existing Steering Committee is too large for effective decision making; a reasonably-sized Board of Directors is necessary

• A strong Executive Director position is needed to coordinate executive and management activities.

• Other international universities need to be more directly involved

• Founding universities have majority oversight over fiscal and legal compliance

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Design Principles

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• We have two distinct (but related) activities, research and standards development– Since they have different types of needs for involvement and integrity,

separate structures are being proposed for each activity– TSC members, who pay for the research, should have a voice in

prioritizing research topics and selecting research partners; this needs to be coupled with academic voices to ensure academic integrity

– Standards development and approval should ensure that key stakeholder groups have equal voice; paid members should not have undue influence on standards outcomes

• These solutions are provisional until they can be codified into a member contract– The Board of Directors will be charged with final design of sector decision

rights, external review mechanisms, etc.

Design Principles

Proposal

• Proposal to create a governance structure for the Sustainability Consortium– Section 1: Board of Directors– Section 2: Managing Board– Section 3: Executive Director– Section 4: Advisory Councils– Sections 8-12: Legal and Contractual Details

• Recommendations (only) to the Board– Section 5: Research Operations– Section 6: Standards Operations– Section 7: Advisory Council Policies

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Managing Board1 ASU, 1 UA,

1 Corp. Member

Board of DirectorsOne representative reach from ASU and UA, representatives from 4

other Universities, 5 Corporate Members,2-4 NGO representatives as non-voting,

ED as non-voting Director

Executive Director (ED)

Report on compliance issues

Administrative StaffASU: Operations, Marketing,

Accounting, DevelopmentUA: Operations, Events, Accounting,

Development

Research Director (RD)Employee of UA or ASU

Ensure integrity of research; Oversee all research activities; Helps initiate

external funding opportunities

Standards Director (SD)AD’s assume role in interim

Ensure integrity of standards development; Oversee internal and

external Sector activities

• Selection of corporate members by election by Tier I corporate members of Tier I nominees (Corporate Advisory Council).

• Selection of universities initially by selection by Managing Board, eventually by election from University Advisory Council.

• Selection of NGOs initially by Board, eventually by election from Civil Society Advisory Council.

Phase II (“Expansion and Delivery”)

Governance Structure MB BoD

SD RD AS

ED

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Direction and oversight of the substantive decisions of the Consortium

• Strategic Direction Setting• Monitoring strategy implementation• Review of candidates and selection of the Executive Director• Determination of research priorities and allocation of research funds

to working groups• Ultimate authority over developed standards • Development of policies governing sector decision rights, external

review processes and similar operational policies

Board of Directors MB BoD

SD RD AS

ED

Board of DirectorsOne representative reach from ASU and UA, representatives

from 4 other Universities, 5 Corporate Members,2-4 NGO representatives as non-voting,

ED as non-voting Director

Composition of Inaugural Board– Five Tier I corporate members, elected by Tier I corporate

members– Six universities (one seat each, ASU & UA, four

international universities)– UA and ASU will occupy seats until other universities

selected• Initial appointment of universities by Managing Board in

conjunction with Governance Task Force and/or Board of Directors

– Two to four NGOs in non-voting capacity (initial appointment by Board of Directors)

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Board of Directors MB BoD

SD RD AS

ED

Issues the Board will lead once seated– Selection of Executive Director– Sector decision rights– External review mechanisms– Formal roles of Advisory Councils– Selection mechanism for Universities and Civil Society

members– Plan for moving to Phase III-Institutionalization

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Board of Directors MB BoD

SD RD AS

ED

In Phase II, UA and ASU will continue to house and administer the Consortium• The Managing Board will work collaboratively with the Board of Directors,

including in the selection of the Executive Director and budgeting. • The Managing Board will have final approval over administrative issues,

including:– Compliance with relevant laws and regulations.– Final approval of budgets and financial operations– Final approval of personnel decisions, including hiring the Executive Director

and selection of Academic Directors• Composition of the Managing Board will consist of one senior

administrator from ASU and UA and a corporate member of the Board of Directors.

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Managing Board MB BoD

SD RD AS

ED

Managing Board1 ASU, 1 UA,

1 Corporate Member

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The Executive Director will be responsible for overall operational effectiveness of the Consortium

• Implementation of strategies developed in conjunction with the Board• Management of the activities of the Consortium

Reporting Relationships• Board of Directors: Strategy and operations• Managing Board: Legal and financial compliance• Standards Director, Research Director, and Staff report to Executive Director

• Research Director reports to Board on certain research activities

Selection• Managing Board and Governance Task Force initiate international search• Screened pool of candidates will be presented to the Board in January. • The Board will select the Executive director, subject to approval of the

Managing Board, by the end of February

Executive Director MB BoD

SD RD AS

ED

Executive Director (ED)Employee of ASU or UA

Oversight of Administrative, Research, and Standards activities

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Sector Working Groups (SWG)SWG Coordinator (academic employee) SWG

members (Tier 1 and Tier 2 TSC members)Identify research priorities & partners

Consortium Working Groups (CWG)CWG Coordinator (academic employee) CWG

members (Tier 1 TSC members)Identify research priorities & partners

• Board of Directors allocates research funds to Working Groups based on formula• Working Groups determine funding priorities and partners• Working Group Coordinators provide direct project oversight• RD provides high-level project oversight, seeks synergies across activities, ensures

academic integrity.• RD has special reporting relationship to the Board of Directors.

Research EB BoD

SD RD AS

ED

Research Director (RD)Ensure integrity of research; Oversee all research activities; Helps initiate

external funding opportunities

Recommendations to the Board

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TSC Sector Working Groups (SWG)SWG Coordinator (academic employee) SWG members

(Tier 1 and Tier 2 TSC members)Work to draft measurement and reporting standard

Standards Approval Board – one for all of TSC4 Tier 1 members representative of all Sectors, 4

NGO/Govt, 4 AcademicProcess review to ensure standards development process

followed

Standards development process:1. SWG drafts standard2. Draft Standard open for public

comment3. SWG revises standard and

submits to Review Panel4. Review Panel recommends

revision or approves standard5. Approval Board approves

process6. Standards Director reviews,

sends to ED, BOD for final approval--ED and BOD can only reject for process reasons

External Sector Working Groups (SWG)Standards drafted by bodies external to TSC

Standard Review Panel – one for each Sector4 Tier 1 or 2 members, 4 NGOs, 4 Academics

Technical review to ensure standards based on adequate levels of scientific support

Standards EB BoD

SD RD AS

ED

Standards Director (SD)AD’s assume role in interim

Ensure integrity of standards development; Oversee internal and

external Sector activities

Recommendations to the Board

Other• Section 8-General: Approved governance structure cannot require any

entity to violate laws or accreditation standards or to jeopardize tax status.• Section 9-Contractual Foundation for Phase II: Establishes the approved

governance structure as the contractual foundation for the Sustainability Consortium.

• Section 10-Amendment to the MOU: Approved governance structure will amend existing MOU between ASU and UA where relevant.

• Section 11-Amendment to Membership Agreements: Approved governance structure will amend membership agreements where relevant.

• Section 12-Effective Date: Effective date of the governance proposal is January 1, 2011.

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OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY

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Timeline

Proposal presented to Steering CommitteeOctober 20

Board Nominations (Tier 1 Only)October 22

Board Nominations CloseNovember 15

Electronic Election of BoardDecember 1-15

First Board MeetingMid-January

Selection of Executive DirectorLate-February

Proposal

• Proposal to create a governance structure for the Sustainability Consortium– Section 1: Board of Directors– Section 2: Managing Board– Section 3: Executive Director– Section 4: Advisory Councils– Sections 8-12: Legal and Contractual Details

• Recommendations (only) to the Board– Section 5: Research Operations– Section 6: Standards Operations– Section 7: Advisory Council Policies

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