Directors’ Climate Journey
Enabling you to take the climate challenge into the boardroom
What is the Chapter Zero: Directors’ Climate Journey?
Why take part in the Chapter Zero: Directors' Climate Journey?
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.
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:
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
View the awareness and context recordings created in collaboration with ICAEW
- Why it’s time for businesses to adapt (4mins)
- Why climate change is an issue for humanity (4mins)
- Why climate change is a current issue for business (5mins)
Total viewing time: 13 minutes
Provides context of the climate challenge facing businesses.
View the climate recordings to hear more about the impact on aspects of business such as asset values and for good business examples
- Bringing climate change onto the board agenda (5min)
- Strategy and risk assessment (11min)
- Opportunities and scenario setting (8mi )
- Choosing metrics and targets (7min)
- Financial statement and asset value impact (15min)
- Narrative reporting in the annual report (5min)
Total viewing time: 59 minutes
Examples of implementation of key climate considerations to use as you adapt the strategy, set targets and monitor progress.
View the Sarah Breeden recording, read the Bank of England's discussion paper and read the public letter from Larry Fink, CEO of BlackRock
Total viewing time: 30 minutes
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.
Complete the climate action self-assessment in the Chapter Zero Toolkit
Dip in and out of the Chapter Zero Board Toolkit and perform the climate action self-assessment 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
Read the World Economic Forum’s 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.
Read Deloitte's 'A closer look at climate change'
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
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.
- Full Disclosure: A high level guide to TCFD alignment.
- Carbon Disclosure Standards Board and Sustainability Accounting Standards Board released a TCFD Implementation Guide
- Toward Common Metrics and Consistent Reporting of Sustainable Value Creation
- Financial Reporting Council – Climate-related corporate reporting – where to next?
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.
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.
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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.