Tere is so much talk about climate and corporates nowadays that one could almost assume every company has a climate governance in place. The Harvard Business Review article “How Robust Is Your Climate Governance?” reveals that the practice of climate governance varies widely. The article is based on corporate disclosures and interviews conducted by the authors. It outlines key features of effective board engagement in climate governance. 

The article provided me with plenty of insights, which is why I want to share the key points I found most significant.

https://hbr.org/2024/11/how-robust-is-your-climate-governance

Five points I like to highlight based on the HBR article:

1 Understanding the climate-profile of the company 

The article actually talks about understanding the double materiality of climate issues. How the company affects the climate and climate-related matters, and how climate and climate-related matters affect the company. Both risks and opportunities should be analyzed. 

The authors also reflect on climatepositioning and targetsetting. According to the authors all companies don’t need to be frontrunners. In my opinion, however, just following regulation can also mean a lot of work and changes to business as usual. Also for smaller companies understanding their climate profile may be essential due to the many expectations in their value chain. 

2 Climate issues part of the board’s mandate 

Establishing clear responsibilities within the board for climate-related issues helps to ensure that climate considerations are integrated into corporate governance. The authors recommend assigning different aspects of climate oversight to different committees within the board. Board oversight of at least some climate issues is increasingly expected also by many stakeholders. 

3 The need for climate-related knowledge and experience in the boardroom

I agree with the authors of the need for continuous learning because the field is evolving so rapidly. However, I see more opportunities than the authors in having a specialist in the board for companies spesifically in sectors where climate is a fundamental question. There will still be need for educating the whole board too. 

4 Incorporating  climate into executive performance evaluation

This is a much debated issue. The authors point out that their experience with companies that tie compensation to climate metrics is that the very act of doing so gives the organization a reason to better measure and track the metrics.

5 Aknowledging the challenges of climate governance 

It’s sometimes said that climate targets and policies are difficult or even impossible to set because the lack of real data. There are a lot of uncertainties in the world. Also trade-offs are present. But boards still need to make decisions based on available information. 

Having a clearly articulated climate positioning  of the company can help balance the decision-making in difficult topics. 

I consider these elements crucial for companies aiming to strengthen their climate governance frameworks and effectively address climate-related challenges. If you need someone specialised in above mentioned topics in your board, I’m a certified board member. 

#climate #boardwork #governance #climatepositioning #climaterisks #opportunities #climatetargets #oversight #hbr