Guide to board oversight of climate change
The United States National Association of Company Directors (NACD) has published a useful guide on board oversight of climate change.
Governance Challenges 2022 – Climate Governance aims to help boards establish and continuously improve their oversight of risk and opportunity as the impacts of climate change continue to evolve. There is a strong focus on delivering long-term value.
Authored by the KPMG US Board Leadership Centre, the Climate Governance guide proposes a framework for board oversight based on six areas identified in KPMG’s papers Boardroom Climate Competence: Getting Ahead of the Curve and Boardroom Climate Competence: Organizing for oversight:
- Level setting - focus the discussion.
- Risk assessment - take a comprehensive look at climate risks for your business.
- Opportunity assessment – re-evaluate your strategies in light of climate change to identify opportunities for growth and transformation.
- Integration - encourage engagement across the entire enterprise.
- Board governance - ensure that climate-related oversight is built into board composition, structure, and processes.
- Communication - set the tone for disclosure and stakeholder engagement.
Before establishing a framework, the guide recommends an assessment of the board’s current level of climate awareness. It notes that, given the increasing importance of climate considerations to strategy, risk, reputation, and social license to operate, it is worth considering the addition of climate knowledge to the board matrix.
Among its recommendations, it suggests boards leave political feelings to one side in climate discussions and focus on business implications and the role of the board as a steward of the company’s long-term value.
The guide also urges boards to look at climate-based opportunity as well as risk and to engage with management on new business ventures enabled by climate change.
The NACD is the host of the US arm of the global Climate Governance Initiative (CGI). Chapter Zero New Zealand is also a CGI member, hosted here by the Institute of Directors.
Download the guide Governance Challenges 2022 – Climate Governance
Also see KPMG's guide Charting a course to net-zero which provides guidance on how to move organisations from decarbonisation ambition to action.