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Corporate governance|How Robust Is Your Climate Governance?
Corporate governance

How Robust Is Your Climate Governance?

Eight hallmarks of meaningful board engagement—and the challenges associated with each by Lynn S. Paine and Suraj Srinivasan

From the Magazine (November–December 2024)
Stephen Wilkes

Summary.   

During the past few years, as evidence of climate change and its effects has mounted, many corporate boards have added climate governance to their agendas. But the maturity of boards’ climate-oversight processes and activities varies widely. To better understand how climate issues are being handled in the boardroom and to determine what good climate governance looks like in practice, the authors interviewed 20 directors who hold leadership positions on the boards of S&P 500 companies. Drawing from those interviews and other research, they identify eight hallmarks of meaningful climate oversight. For example, “the board is knowledgeable about the company’s climate profile,” “the board has the expertise needed for effective climate oversight,” and “the board can articulate the company’s climate positioning and strategy.” The authors also offer their perspective on the set of issues associated with each hallmark that corporate leaders must grapple with as they decide how to incorporate climate issues into their company’s governance. Climate concerns are here to stay, and climate governance will increasingly be seen as a core element of good governance.
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During the past few years, as evidence of climate change and its effects has mounted, calls for corporate boards to add climate governance to their agendas have increased dramatically. And many boards have listened. According to a Deloitte study, 38% of S&P 500 boards disclosed their oversight structure for climate risk in their 2022 proxy statements. Another study, conducted by the law firm Orrick, looked at 367 S&P 500 companies that had publicly disclosed their responses to the CDP’s 2023 climate-change questionnaire and found that 99% reported having board oversight of climate-related issues.

Read more on Corporate governance or related topics Environmental sustainability, Boards, Climate change and Executive compensation
A version of this article appeared in the November–December 2024 issue of Harvard Business Review.
Read more on Corporate governance or related topics Environmental sustainability, Boards, Climate change and Executive compensation

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