The Sustainability Voice Missing From Most Boardrooms

Companies spend enormous amounts of time debating sustainability strategy. They invest in emissions reduction. They launch environmental initiatives. They publish ESG reports. They set ambitious goals.

Yet many overlook a simpler question: Who is helping shape those decisions in the boardroom?

Recent research published in the Journal of Business Logistics suggests that board composition may influence environmental performance in ways that executives do not fully appreciate. The study examined more than 2,000 firm year observations across 306 publicly traded business-to-business companies. The researchers explored whether having a customer or supplier represented on the board of directors affected a firm’s environmental performance.

The answer was yes.  But not in the way many executives might expect.

Most discussions about board diversity focus on demographics, functional expertise, or independence. This research points to another form of diversity that may be equally important: where directors sit within the supply chain. A customer and a supplier can look at the same sustainability decision and see very different priorities. Those priorities often shape the choices firms ultimately make.

The researchers found that companies with customer affiliated directors generally achieved stronger environmental performance. Customer representatives appeared to bring market knowledge and external stakeholder expectations into board discussions. They helped connect environmental initiatives to brand reputation, customer loyalty, and long term competitive positioning.

The effect became even stronger when firms faced volatile demand. When sales fluctuate, companies search for ways to stabilize customer relationships and differentiate themselves from competitors. Under those conditions, customer directors often viewed environmental initiatives not as costs, but as strategic investments that could strengthen customer trust and support future growth.

Supplier affiliated directors produced a different outcome. Conventional wisdom suggests suppliers should help companies improve sustainability because so much of a firm’s environmental footprint resides upstream in the supply base. Supplier representatives possess deep operational knowledge. They understand manufacturing processes, sourcing decisions, logistics networks, and opportunities for efficiency improvements.

The researchers expected these capabilities might improve environmental performance.  Instead, they found evidence that supplier directors often emphasized cost control and operational efficiency. When firms faced high production costs or financial pressure, environmental performance tended to weaken. Supplier directors appeared more likely to prioritize immediate economic concerns than longer term sustainability investments.

This does not mean supplier directors are bad for business. In fact, the study found evidence that supplier directors can improve financial performance through stronger operational discipline and efficiency. The issue is that efficiency and sustainability do not always point in the same direction, particularly when margins are under pressure.

That insight highlights a broader challenge facing many organizations.  Executives often talk about balancing economic and environmental objectives as if the tension exists only between shareholders and sustainability advocates. In reality, competing priorities frequently exist within the supply chain itself.

Customers reward reputation, trust, and brand differentiation. Suppliers often focus on efficiency, productivity, and cost competitiveness. Both perspectives create value. Both are legitimate. But they can lead boards toward very different decisions.

The larger lesson is that sustainability outcomes are not driven solely by strategy. They are also shaped by governance. Who has a seat at the table influences which tradeoffs receive attention, which risks are prioritized, and which investments survive budget discussions.

For boards, the implication is straightforward.  Adding stakeholder representation should not be viewed as a symbolic governance exercise. Different stakeholder groups bring different decision logics into the boardroom. A supplier director may strengthen operational discipline. A customer director may strengthen market responsiveness and sustainability orientation. Neither perspective is inherently superior. The challenge is ensuring that boards possess the right mix of voices for the strategic challenges the firm faces.

Companies pursuing aggressive sustainability goals may benefit from stronger customer representation or from explicitly balancing efficiency oriented directors with directors who can articulate market expectations around environmental performance.

Most governance discussions treat stakeholder representation as inherently beneficial. This research suggests a more nuanced reality. Different stakeholder groups push firms toward different priorities, especially when companies face difficult tradeoffs between cost, growth, and sustainability. As sustainability becomes increasingly tied to competitive advantage, board composition becomes a strategic choice rather than a governance formality.

Based on research published in the Journal of Business Logistics: 

Ambulkar, S., Ramaswami, S., Arunachalam, S., & Bommaraju, R. (2026). Stakeholders in the Boardroom: Does Inclusion of a Customer and a Supplier on Firms’ Board of Directors Impact Their Environmental Performance? Journal of Business Logistics, 47, e70064. https://doi.org/10.1111/jbl.70064