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Incorporate material sustainability factors, including climate change, into the formulation and evaluation of business strategy and risk management.
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Take a fresh look at how the board oversees climate change and other sustainability risks, and expressly allocate responsibility to an existing board committee, a new committee or the full board, as appropriate. Memorialize the board’s decision in a committee charter or other governance document.
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Understand the policies of significant investors, including how these policies may relate to their investment analysis. Prepare to meet requests by these investors for substantive engagement.
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Recognize that investors expect companies to be proactive in providing enhanced disclosure, such as an annual sustainability or climate change report, as well as insights into how the board oversees the management of material risks posed by climate change. Note that investors are looking for such disclosure to address matters that they consider meaningful, such as 2-degree scenario planning.
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Keep abreast of efforts to create standards and benchmarks for reporting on climate change and other sustainability issues, such as those underway by the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB).
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Consider, and discuss with the disclosure committee, how the company addresses existing SEC interpretive guidance about climate change disclosure in its periodic filings (i.e., MD&A, risk factors).
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Understand the disclosures and policies of the company’s peers with respect to climate change risks and opportunities.
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Provide periodic updates to the board of directors on industry-specific issues and pressures with respect to climate change to enable directors to thoughtfully consider climate risks and opportunities faced by their companies.
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In connection with reviewing board composition and skills, consider whether the board has the necessary expertise and competency to address environmental and climate issues.