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Do board members also have a "duty of imagination"?

It takes mature responsibility to run a business in Virginia. A company's board of directors is not only charged with building value, but also has fiduciary duties to the company's shareholders. Recent federal legislation has added to those fiduciary obligations. The Sarbanes-Oxley Act requires the board of directors of public companies to take responsibility for financial reporting and audits. The subsequent enactment of the Dodd-Frank Act in 2010 placed additional requirements on the boards of financial institutions.

In order to help a company find solutions to global problems, corporate board members are now being charged by some observers with a "duty of imagination". Some boards have already embraced this idea. As an example, Tesla Motors is answering the call for sustainable transportation by its production of electric cars.

The duty of imagination calls for boards to not only be responsible for the profitability of a company in the short-term, but to look to the future. It asks that a board of directors show consideration for the planet, the growing population, and the dwindling resource base. Admittedly, climate change, education, human rights, and health care are complex issues for a board to take on, issues over which they have little or no control.

Companies and individuals can be sued for breach of contract if someone believes that they did not fulfill an obligation. If a board member is sued for not fulfilling fiduciary duties, a business and commercial law attorney could be able to guide the person through the process of defense against the claims. With ever-changing legislation and expectations, an attorney could be able to answer questions about the duties and responsibilities that are required of board members.

Source: The Guardian, " The duty of imagination: how creative corporate boards can grow value", Alice Korngold, September 18, 2013