Topics:   Corporate Governance,Featured

Topics:   Corporate Governance,Featured

April 22, 2021

NACD Joins Climate Governance Initiative as US Host Chapter

April 22, 2021

NACD today announced that it has joined the Climate Governance Initiative (CGI), a global project hosted by the Centre for Climate Engagement, Hughes Hall at the University of Cambridge and in collaboration with the World Economic Forum, as the US host chapter. NACD joins the initiative as the impacts of climate-related risks and opportunities increasingly affect American businesses and the global economy. The move also comes as companies’ stakeholders, from customers to shareholders, expect that organizations and board members operate as good stewards of the earth and transition to a net-zero carbon economy, while also harnessing the new opportunities for value creation that these changes present.

The CGI has established a global network of national and regional chapters in more than 12 countries to date and continues to expand to promote the adoption of the Principles for Effective Climate Governance, published by the Forum. NACD is the exclusive host chapter for directors in the United States. Brazil, Brussels, Canada, France, Italy, Malaysia, Russia, Switzerland, and the United Kingdom are among other locales to host operational or upcoming chapters.

The ultimate goal of the initiative is for boards to:

  • gain climate awareness and skills;
  • embed climate considerations into board decision-making; and,
  • understand and act upon the risks and opportunities that the climate emergency poses to the long-term resilience and business success of their companies.

These goals will encourage boards to adopt the Forum’s guiding principles for effective climate governance. These principles call for:

  1. Climate accountability on boards
  2. Command of the (climate) subject
  3. Board structure
  4. Material risk and opportunity assessment
  5. Strategic and organizational integration
  6. Incentivization
  7. Reporting and disclosure
  8. Exchange

“Climate change now is a clear disruptor that demands responsible and responsive leadership from business,” said Peter R. Gleason, NACD CEO, who participated in a March 23 climate panel alongside other CGI chapter leaders to discuss the importance of corporate boards in turning the tide of the climate crisis. “Since boards play a critical role in shaping this response, we want to empower them with the resources they will need to incorporate climate issues into company strategy. They must be prepared to act on the emerging opportunities that policy and operational changes will likely bring.”

While climate change reconfigures the corporate risk landscape, companies will be left vulnerable as policy and regulatory changes evolve; as consumers, investors, and other stakeholders exert increasing pressure for change (vocally and through purchasing preferences); and as the competition to respond and adapt to the changing landscape tightens. Climate change is a risk multiplier, amplifying issues that boards have traditionally grappled with in both new and ongoing ways.

These vulnerabilities and issues do not only impact larger companies. According to panelists at a recent NACD Florida Chapter event titled “The Race to Net Zero,” as larger companies move toward net-zero emissions, they’ll look to their supply chains to evaluate their climate impacts. The industrial giant Siemens, for example, requires companies to share their environmental, social, and governance stories in their responses to requests for proposals.

“With governmental actions across the globe likely to accelerate and the expectations of stakeholders to intensify, climate change is now a major business and board imperative,” Gleason continued. “We are now at an inflection point in the corporate response to climate change. NACD is joining this Climate Governance Initiative to educate our members so they can navigate the risks and seize the opportunities for innovation and growth, no matter the industry.”

“Across the world, boards are recognizing the crucial role they have to navigate the private sector to a net-zero economy and are enhancing their capabilities to ensure long-term stewardship. We are delighted that the National Association of Corporate Directors is joining the Climate Governance Initiative and look forward to collaborat[ing] in support of this global community of nonexecutive directors and its role in addressing the climate challenge,” said Antonia Gawel, member of the executive committee at the World Economic Forum.


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