How company boards can be a vanguard for climate action

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.

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.

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:

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

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.