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The board should ensure that management assesses the short-, medium- and long-term materiality of climate-related risks and opportunities for the company on an ongoing basis. The board should further ensure that the organisation’s actions and responses to climate are proportionate to the materiality of climate to the company.
Guiding questions
- Is climate considered in company-wide assessments of material risks and opportunities in the short, medium and long term?
- Are short-, medium- and long-term time frames considered in materiality assessments at your organisation? Are the definitions of these time frames appropriate for your organisation specifically (depending on the sector, size, investment time frames etc. of your organisation)?
- Are different climate scenarios being included to inform the assessment of climate change materiality at your organisation?
FEATURED RESOURCE
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Climate risk governance guide
Climate risk is no longer an issue facing select sectors, but a standing item on many board agendas. To assist directors address climate change governance, the AICD has developed a practical guide in collaboration with Minter Ellison.
Resources
[Source: to see more background on this principle and further guiding question, see the World Economic Forum Guide: How to Set up Effective Climate Governance on Corporate Boards: Guiding principles and questions, pp13-14]
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