Chapter Zero:

Directors’ Climate Journey

Enabling you to take the climate challenge into the boardroom

Getting started
What is the Chapter Zero: Directors’ Climate Journey?
A framework developed by Chapter Zero for its members to help with increasing climate change awareness and embedding systemic responses that facilitate good climate governance.
Why take part in the Chapter Zero: Directors' Climate Journey?
Business resilience requires consideration of climate change. The Chapter Zero Directors’ Climate Journey aims to help non-executive directors (“NEDs”) take the conversation into the boardroom and debate responses to the climate challenge.
Who should take the Chapter Zero: Directors' Climate Journey?

All non-executive directors committed to good climate governance and risk management. Especially board chairs wanting to shape the board agenda on climate change, chairs of audit or risk committees leading the governance of climate change risk and reporting, remuneration chairs incentivising behaviour, and NEDs wishing to understand the key business risks and opportunities for value creation, as well as ensuring sustainability.

The risk to asset values and access to capital is starting to be understood and boards are increasingly recognising the need to assess the financial risk resulting from the physical impacts of climate change and to develop strategies for both adaptation to protect their business models, and risks and opportunities arising from climate change mitigation, including from Government policies to achieve net zero emissions by 2050.

All sectors will be impacted as the transition away from carbon-intensive business models and products, as well as capital reallocation to lower carbon alternatives, will lead to a fundamental reshaping of finance and huge opportunity.

Listen to Chapter Zero Steering Group member Susan Hooper discussing the Directors’ Climate Journey and how to use it to engage in the climate debate at board level. 

The objective

The journey maps out a path for non-executive directors to increase their understanding of the climate topic. It aims to support NEDs to have high quality and effective boardroom discussions and debate the impacts of climate change on their businesses and strategic response.

The journey framework aims to help NEDs to:

Articulate the long-term scale of the challenge for their business of net zero by 2050


Recognise the requirements on directors to ensure consideration of key climate risks under s172 of the Companies Act 2006


Understand the wider stakeholder group, and their ambitions: customers, employees, providers of capital (both financial institutions and investors). Ensuring the appropriate executive director ownership and stakeholder engagement and communication takes place


Adopt the WEF Principles of Climate Change Governance; have developed a strategy which is being integrated into the business model and ensure they are embedded in board and sub-committee discussions


Ask the right questions of the CFO, CEO and COO to ensure the board has the papers it needs for effective discussion, challenge and oversight


Know the landscape of specialist advisers


Prepare for reporting in line with the Taskforce for Climate-related Financial Disclosure


Participate in the climate debate and remain up to date on the policy, regulatory environment and innovation

The Chapter Zero Directors’ Climate Journey:

8 Steps

We have designed events and curated online content which will help you to stay up-to-date on the climate topic. The framework has been designed for non-executive directors at various stages of their personal climate journey and some stages may not be appropriate for all users.

On the right are 8 steps to help you initiate and continue the conversation about business’ climate response. Below, there are additional questions you may want to ask your board.

Questions for the board to consider asking
  • Does the Board understand the risks and opportunities to the business with respect to climate change?

  • How does the company identify climate-related risks and opportunities, both from a physical and transition risk perspective, that are material to the business?

  • Are climate-change risks incorporated into the company’s enterprise risk management activities?

  • Has management undertaken any form of scenario analysis to evaluate climate risk across different time horizons as informed by leading market initiatives (such as IPCC)?

  • Has the Board developed a climate change strategy, supported by objectives and targets? Does it have an implementation plan?

  • Does the company understand what types of disclosures its stakeholders (including institutional shareholders) seek, and how the company and the board respond?

  • How does the company collect data that supports high-quality disclosure against its plan, strategy, objectives and targets? What processes and controls are in place to address evolving climate-change risks and related disclosure aligned with TCFD recommendations? Does a Board committee regularly consider these issues?

  • Does the company obtain external assurance on disclosures of climate performance?

  • How does the Board oversee the ongoing management of climate-related risks, and is the Board’s role in the management of that risk disclosed?

 

Adapted from the Harvard Law School Forum on Corporate Governance

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Step 1
View the awareness and context recordings created in collaboration with ICAEW

Total viewing time: 13 minutes

Provides context of the climate challenge facing businesses.

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Step 2
View the climate recordings to hear more about the impact on aspects of business such as asset values and for good business examples

Total viewing time: 59 minutes

Examples of implementation of key climate considerations to use as you adapt the strategy, set targets and monitor progress.

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Step 3
View the Sarah Breeden recording and read the Bank of England's accompanying discussion paper. For a view of the investor’s expectation on climate change read the public letter from Larry Fink, CEO of BlackRock and a report of the IIGCC

For policy insights, view the recording of Sarah Breeden who has oversight of the Bank of England’s work enhancing the financial system’s resilience to climate change. The BOEs discussion paper on 2021 stress tests can be viewed here: The 2021 biennial exploratory scenario on the financial risks from climate change discussion paper.

Total viewing time: 30 minutes

For a view of the investor’s expectation on climate change, read Larry Fink’s letter to CEOs discussing the Fundamental Reshaping of Finance. As well as the IIGCC report which sets out investor expectations that directors and auditors deliver Paris-aligned accounts. The accounts, must reflect the impact of getting to net zero emissions by 2050 for assets, liabilities, profits and losses.

Total reading time: 60 minutes

You will hear about the financial implications of the climate change challenge.

You will be aware of the three scenarios that capture a range of prudent estimates for transition pathways and climate outcomes. You will be able to assess your business’ resilience in light of these macroeconomic scenarios:

  • Early policy action scenario
  • Late policy action scenario
  • No additional policy action scenario

You will read the views of the largest asset manager in respect of the impacts of climate change on business and how it is now an integral part of the portfolio construction and risk management.

You will understand how the investors intend to encourage the transition to net zero.

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Step 4
Complete the Board Readiness Check in the Chapter Zero Toolkit

Dip in and out of the Chapter Zero Board Toolkit and perform the Board Readiness Check on page 14.

Total reading time: 60 minutes

You will understand the key issues relating to climate change, be able to initiate the conversation at board level tailored to your business and can then identify the actions needed to start addressing the risks and opportunities.

The self-assessment will:

  • Help the Board recognise the need for action and specify an intended high-level direction of travel
  • Provide a platform from which to initiate/direct the in-depth scenario analysis and planning that will be needed to identify and implement specific improvements
  • Help the Board with its considerations around the development of the strategy, setting objectives and targets andimplementation plan
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Step 5
Read the World Economic Forum’s Guiding principles and questions
You can read the World Economic Forum’s How to Set Up Effective Climate Governance on Corporate Boards: Guiding principles and questions

Total reading time: 30 minutes

Principles for creating governance structures that demonstrate to investors, regulators and other stakeholders how the company is integrating a strategic approach to addressing climate-change risks and opportunities.

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Step 6
Read our publications which summarise: i) the potential physical risks your business could face, and ii) the financial reporting implications of climate change, and share them with your executive team.

1. Read Questions to assist non-executive director oversight of physical climate risk management by Acclimatise, a publication discussing the potential impacts of physical risks from climate change and the questions NEDs can ask to build in resilience.

Total reading time: 60 minutes

2. Read A closer look at climate change by Deloitte, a publication on climate change for Those Charged with Governance.

Total reading time: 30 minutes

Brings together s172 of the Companies Act 2006 and the Non-Financial Reporting Directive:

  • Financial Reporting Council expectations
  • Taskforce on Climate-related Financial Disclosures recommendations
  • Types of climate change risk
  • Governance, risk management and strategy
  • Metrics and targets
  • Impact on the financial statements
  • Impact on narrative reporting
  • Where to find examples of good disclosures
  • Climate Change FAQs
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Step 7
Understand TCFD, the objective of reporting and how it applies to your business

Deep dive into the implementation guidance for Task Force for Climate-related Disclosures (“TCFD”) and the whitepaper discussing a general framework for companies to demonstrate their long‑term sustainability.

Total reading time: 60 minutes

You will have market-driven recommendations for disclosures that will allow you to gain greater insight into the climate-related risks and opportunities, and deliver consistent, comparable, and reliable corporate disclosure to inform decision making.

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Step 8
Continue attending Chapter Zero events and reading our frequently updated content

Stay up to date by reading the content on the website and in the bulletin, or by attending our events.

Event registration time: 30 seconds
Monthly bulletin reading time: 15 mins

You will be kept up to date and informed on the latest developments in the climate space by reading the monthly bulletin and registering for our events.

See our resources page for recordings of past events.

We'd like your feedback

To provide feedback and/or if you would like to notify us of your completion of the first seven steps of the eight-step journey please email us.

Feeds and newsletters to stay up to date

  • Bloomberg’s daily Green newsletter: real-time insights on the latest in science, environmental impacts, zero-emission tech and green finance.
  • Carbon brief: daily email digest of the past 24 hours of media coverage related to climate change and energy, as well as a pick of the key studies published in the peer-reviewed journals.
  • Edie news: current affairs, climate policy, consumer trends and corporate responses.
  • Finsbury’s guide to the climate change initiatives to watch: a compact weekly discussion of the most relevant climate news.
  • Grantham institute: the mailing list provides weekly summaries of the world-class research and innovation, with a view to assisting business decision-makers.