How to Set Up Effective Climate Governance on Corporate Boards

Publish date
20 Dec 2021
Reading time
30 mins

This report by the World Economic Forum (WEF), presents the nine fundamental Principles of Effective Climate Governance.

Developed in 2019, the Principles have become the foundation for the Forum’s approach and the development of the Climate Governance Initiative, of which Chapter Zero New Zealand is a part.

The governance principles are designed to increase directors’ climate awareness, embed climate considerations into board structures and processes and improve navigation of the risks and opportunities that climate change poses to business.

  • Principle 1 – Climate accountability on boards
  • Principle 2 – Command of the subject
  • Principle 3 – Board structure
  • Principle 4 – Material risk and opportunity assessment
  • Principle 5 – Strategic integration
  • Principle 6 – Incentivisation
  • Principle 7 – Reporting and disclosure
  • Principle 8 – Exchange

“The vision and action of Directors, CEOs and senior-level executives is fundamental to addressing the risks posed by climate change and delivering a smooth transition to a low-carbon economy. Materials, such as this new World Economic Forum report, that support Boards and Executives understand how to deliver on the TCFD can help foster a virtuous circle of adoption, where more and better information creates imperatives for others to adopt TCFD and for everyone to up their game in terms of the quality of the disclosures made.” - Mark Carney, Governor, Bank of England and former Chair, Financial Stability Board

This initiative sought to make these principles both broadly applicable and practically useful for organizations. However, these principles should not be taken as universally applicable to all companies across sectors and jurisdictions. Moreover, they do not intend to be specifically prescriptive in any way. Rather, the hope is that they will serve as tools to help elevate the strategic climate debate and drive holistic decision-making that includes careful consideration of the links between climate change and business.