For most Boards climate change is a steep learning curve.
A regulatory imperative is building across almost all jurisdictions for companies to play an active role in decarbonisation. Shareholders, regulators, customers and employees want to see evidence of a decreasing carbon footprint and expect Boards to provide the requisite oversight. How Boards should fulfil this role is not without challenge given the enormity of tackling climate change, the fast pace of change and the high degree of uncertainty. Nonetheless, Boards do need to be able to give confidence of their ability to oversee Transition Plans, and to provide challenge and guidance to the Executive on the pathway towards Net Zero.
This typically involves considerable Board upskilling on what climate change means for the business, potential pathways and steps towards Net Zero, as well as regulatory frameworks. Given multiple demands on Board time and attention, the Chair needs a clear understanding of how well positioned the Board is today to provide oversight and where the gaps lie.
PUTTING THE BOARD EVALUATION TO WORK
One mechanism that lies at the Chair’s disposal is the annual Board Evaluation, and in particular the external Evaluation. Designed properly an Evaluation can shine a light on where the Board is currently effective in providing oversight and where further development is needed.
A useful tool, and one which should fall out of a well-conducted review, is a learning map and gap analysis of where the Board collectively, and individual Board Members, stand today in terms of their understanding of climate change, and where they need to be.
Climate change creates significant opportunity for corporates that are able to grasp the problem and to become part of the solution. Board oversight and guidance are crucial here – risk oversight and entrepreneurialism need to go hand in hand.
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