Governance Challenges 2022: Climate Governance

The State of Climate in US Boardrooms

The clock is ticking in the race against climate change, and many credible reports are warning of a “Code Red” for the planet, for societies, and for companies. Because climate is an ecosystem-wide issue, it requires an ecosystem approach, which will require every board to develop climate governance agendas focusing on what is at stake for their individual businesses. Where do directors stand on climate issues today, and what is the current state of climate governance in boardrooms? The 2022 Board Practices and Oversight Survey sheds light on the perspectives of directors as the climate change discussion and requirements are quickly evolving. The following is a snapshot of what surveyed NACD members from a variety of companies of various sizes and from different sectors had to say about their approach to their climate oversight responsibilities and practices.

Climate is not yet Considered a “Top Priority"

Although 47 percent of respondents see climate change as an issue, they do not consider it a “top priority” within their company. In fact, only 9 percent see climate as a top priority discussed at all levels of the company, while just under 19 percent state it is “not a concern” for their company. That said, the discussions around climate issues are gradually gaining importance on board agendas. As director awareness increases, climate change is becoming more of a key consideration in strategy, risk management, executive pay, accounting, and reporting of performance: 47 percent of respondents indicated that frequency of climate change discussions increased on the board agenda in the last two years.