Leadership

How company boards can be a vanguard for climate action

Business leaders must act now to achieve maximum impact on climate change.

Business leaders must act now to achieve maximum impact on climate change. Image: Getty Images

Sharon Thorne
Chair Emeritus, Deloitte
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Leadership

  • Company boards can cut through the clutter and provide strategic direction on climate change.
  • A recent Deloitte survey shows only half of board members consider themselves 'climate-literate'.
  • A new collaboration with the World Economic Forum aims to provide company boards with the needed resources.

Board directors and chairpersons are accustomed to navigating a changing and challenging landscape; from the global pandemic to geopolitics, from humanitarian crises to the climate crisis, and from the rise of tech to the Great Resignation, the role of boards in setting long-term strategic direction has perhaps never been more important.

When it comes to fighting climate change, the tides are literally rising, and time is running out. Identifying areas of maximum impact and applying effective governance is critical to preparing organizations to respond with the requisite urgency, and to seize the opportunities that exist in the global system transition that lies ahead. Business leaders must advocate to act now and steer their organizations toward a more sustainable future.

With a topic as complex as climate, a key challenge can be understanding where to focus efforts for greatest impact and which actions will result in long-term enterprise value. From a business perspective, boards of directors are particularly well-positioned to help their organizations break through the clutter and understand where they can be agents of change. To do so effectively, boards need to be prepared to ask the hard questions, and weigh the many climate-related risks and opportunities associated with sustainable investment.

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Yet Deloitte’s recent Audit Committee Frontier survey found that barely half of the board audit committee members surveyed consider themselves “climate literate”, and half of the respondents in the survey do not believe they are well-equipped to fulfil their climate regulatory responsibilities. Two-thirds say their companies lack a clear strategy on climate.

Similar concerns surfaced among fellow board chairpersons in the World Economic Forum’s Community of Chairpersons during interviews and group discussions held late last year. Many expressed a real urgency to enhance knowledge of non-executive directors and step up the discussion on climate and sustainability on boards, as highlighted in the Forum’s paper The Chairperson’s Insights Into Climate Action.

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This is why Deloitte is working with the World Economic Forum and the Climate Governance Initiative and their global network of Chapters to roll out a series of guides to help shape climate action on boards and help equip business leaders with the resources they need to take calculated steps towards a sustainable future.

Launching today, the briefing papers are part of an ongoing series of thought leadership designed to enhance climate competence and steward climate action by board directors across the globe, helping to educate and get chairpersons and their boards up to speed on stakeholder response, risk assessments and alternative decarbonization pathways:

  • The Chairperson’s Insights into Climate Action: Highlights from interviews with chairpersons provides a summary of highlights from interviews with 16 members of the World Economic Forum's Community of Chairpersons on the topic of climate action. It explores key issues and best practices for board members across strategy, risk and opportunity, stakeholders, board competence and operations in relation to climate. It provides perspectives on a number of complex questions covered during the interviews, and encourages chairpersons globally to ask these questions of themselves and their boards.
  • The Chairperson’s Guide to Climate Stakeholders: Understanding how key groups are responding today and how they might respond tomorrow puts a spotlight on how key stakeholder groups are responding to climate change and how they might respond in the future. Chairpersons must be cognizant of the various economic and existential risks presented by stakeholder reactions to climate. The guide provides tools for chairpersons to consider in high-impact reaction scenarios to their company’s operations and gain a deeper understanding of how stakeholders influence each other. The paper helps navigate the complexities presented by a diverse stakeholder network and highlights the short-term trade-offs that boards will need to make.
  • The Chairperson’s Guide to Decarbonization: Understanding the decarbonization roadmap focuses on the role of chairpersons and boards in developing a robust climate mitigation strategy. The paper informs chairpersons of the foundational knowledge for why businesses must address climate change and provides a roadmap to thriving in a low-carbon economy. Drawing on global case studies, the guide demonstrates the threats of not taking climate action, and the opportunities of embedding climate within company strategy.

I encourage board directors to share these resources with their networks, and to get involved with their local Climate Governance Initiative chapters.

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What’s the World Economic Forum doing about climate change?

This is a decisive decade. It is now or never to act successfully against climate change, and we must all get involved and take action. By increasing climate competency on boards and regularly convening to share learnings and best practices, boards can become a vanguard to usher in meaningful climate action within and beyond the companies they support.

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LeadershipClimate ChangeClimate and NatureCorporate Governance
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