Today businesses need to engage in responsible, proactive lobbying for climate action that reduces emissions.

Companies can and must reduce emissions, but only public policy can elevate these efforts to the scale and pace of emissions reductions needed to mitigate climate change.  The political influence of climate-forward businesses with long histories of successful lobbying on other industry-specific issues can lend climate policies the credibility they need to achieve lasting impact.

Companies have an authentic and credible perspective to share on the long-term threat from climate change to their operations. This perspective is their climate story; crafting an honest, persuasive one is the first step in engaging elected officials. 

Corporate government affairs teams need to know and show how climate connects to the company's interest areas. Climate change poses real business risks that affect the economy, jobs and the private sector's ability to provide goods and services. The person who knows the company's climate story best and the person who relays it to policymakers may not be the same.

Those who interface with policymakers in the company must know what the  firm is doing on climate. When sustainability and policy don't interact internally, the result is that most businesses are not getting the credit they deserve for their science-based targets and emissions reduction measures within the halls of government or having influence.

When companies can share their "climate story" using data points and anecdotes, it gives policymakers the credibility and confidence to then go and advocate for ambitious policy. When elected officials can be informed by business, it gives them the confidence to speak to climate issues with authority.

When businesses advocate for climate ambition and send governments clear signals of commitment, this enables governments to be bolder in their own commitments. Likewise, when government sends the private sector clear, long-term signals about climate policy, business can act with the confidence it needs to make low-carbon investments. A few market leaders have begun to harness their influence and engage in thoughtful climate advocacy.

Firms on the leading edge must harness their political influence and recognize that climate policy is urgently needed to protect their customers, employees, suppliers and their own business interests. One of the most compelling narratives a business can tell comes from the private sector harnessing the potential trillions in economic growth to be had when they do well by doing good. The pressure is on companies to put their lobbying where their climate leadership is, with investors, NGOs, and consumers increasingly expecting companies to act. Policymakers will need to listen, but companies first must step up with authentic, credible narratives and demonstrate that they are willing to spend their political capital to further climate objectives.

Specifically, companies need to have a good answer to a question that investors and journalists are asking:

In taking a more formalized approach to reviewing their policy positions on climate change, companies may find inconsistencies. Large, global companies can be involved in many hundreds of associations around the world, represented by many different employees.

Companies may find that associations of which they are members take a position which conflicts with their own, while suggesting that it represents the views of all their members. In some cases, companies may find they unintentionally take conflicting positions across different fora because their various participants are representing only their narrow perspective of the companies’ interests. In other cases, inconsistencies may be intentional, where it suits the company to appear to be supportive of action on climate change while delay action in practice.

There is the potential for inconsistencies between businesses and their trade organizations on any issue, but they are all the more likely on climate. Climate change is not necessarily core to most company’s participation in a particular association.

Yet these inconsistencies—deliberate or not—still dilute the strength of the corporate voice for climate change action. The onus is on companies to be sure they are engaging consistently, and that those purporting to speak for them do really represent their views.

Some companies have started to stand up to speak for themselves and distance themselves from obstructive trade associations. Others have taken a more active role in engaging with trade associations either publicly or privately to try and align association positions to better represent them.

Guiding Questions

  1. Do the board directors consider the risks and opportunities associated with climate change to be an integral part of their accountability for the long-term stewardship of the organization?
  2. To what extent are climate risks and opportunities incorporated into the  board’s understanding of directors’ duties?
  3. Do the board directors undertake decisions that are informed by the best available information on climate risks and opportunities ?
  4. Do the directors feel confident in their abilities to explain their decisions as informed by the best available information on climate risks and opportunities?
  5. Does the board conduct internal performance reviews? Is accountability for climate risks and opportunities considered during internal evaluations of the board?
  6. Are independent performance audits undertaken? If so, do these include climate considerations?
  7. To what extent does the board have a robust awareness and understanding of how climate change may affect the company?
  8. What steps has the board taken to test that its composition allows for informed and differentiated debate as well as objective decision-making on climate issues?
  9. Has an assessment of climate-competence gaps taken place? If so, who is conducting such gap analysis and what recommendations does it contain?
  10. Who is responsible for climate change at board level and are these individuals in positions that will allow them to influence board decisions (e.g. committee chairs)?
  11. What steps is the board taking to ensure it remains sufficiently educated about the relevant climate-related risks and opportunities for its business?
  12. Has the board considered whether it would benefit from the advice of external experts? If so, has the board considered which experts would be most well suited?
  13. How can the board plan for succession to ensure that climate awareness does not stop if an important individual or a vocal climate champion leaves the organization or the board? What kind of skills are incorporated into the desired profile for a new board director?
  14. Has the  board determined how to effectively integrate climate considerations into the board committee structures? Are they integrated into (an) existing committee(s)? Or, are they addressed by a dedicated specific climate/sustainability committee?
  15. How does the board ensure that climate considerations are given sufficient attention across the board (e.g. being discussed in the audit, risk, nomination or remuneration committees)?
  16. How can executive and non-executive directors play complementary roles in meeting the board’s accountability with regards to climate?
  17. Has the way the board embedded climate allow for effective interaction with relevant members of the executive management (e.g. if climate is embedded in the risk committee, does this committee ensure that climate is also addressed by the Chief Risk Officer)?
  18. Has the board considered appointing a climate expert, or creating an informal or ad-hoc climate advisory committee of internal and external experts?
  19. Is climate considered in company-wide assessments of material risks and opportunities in the short, medium and long term?
  20. How does the board verify that the company has embedded effective materiality assessment processes in relation to climate risks and opportunities?
  21. How does the board ensure that the company’s response to climate change is aligned to the materiality and proportionality of the issue to the business?
  22. Are short-, medium- and long-term time frames considered in materiality assessments at the organization? Are the definitions of these time frames appropriate for the organization specifically (depending on the sector, size, investment time frames etc. of the organization)?
  23. How are climate-related materiality assessments conducted? Are they integrated into budget or operating cycle planning?
  24. Are different climate scenarios being included to inform the assessment of climate change materiality at the organization?
  25. How often are climate-related scenario analyses repeated? Does the board feel this frequency is proportionate to the climate risk exposure of the company (i.e. do they take place sufficiently frequently)? Do investors share the board view?
  26. Are climate scenarios conducted in such a way that the results can be used to inform the company’s or board’s action or response to climate issues?
  27. Does the corporate strategy include a holistic climate strategy informed by scenario analysis, i.e. climate risk mitigation and adaptation as well as business continuity and opportunities?
  28. Are climate considerations incorporated into the strategic planning, business models, financial planning and other decision-making processes?
  29. Is climate integrated into the “three lines of defence” and the Enterprise Risk Framework (ERM) for the company?
  30. How does the board ensure that climate risks and opportunities are identified, mitigated, managed and monitored across the company?
  31. Does the board feel confident that sufficient resources (e.g. staff, technology) have been dedicated to the identification, mitigation, management and monitoring of material climate-related risks?
  32. Is the company’s management incentivization scheme designed to promote and reward sustainable value creation over time?
  33. Are any climate targets and/or goals integrated into management’s incentivization model?
  34. If so, how do these targets and/or goals relate to other management incentives? Are there any inconsistencies or contradictions in relation to the other incentives?
  35. If variable incentives are extended to non-executive directors, do these include incentives related to climate and avoid potential conflicts of interest?
  36. Which climate KPIs (key performance indicators), targets, goals and/or achievements does the board incorporate into the management incentivization models (e.g. related to carbon emissions, science-based targets or inclusion in climate indices)?
  37. What are the benefits and limitations of using these KPIs, targets, goals and achievements?
  38. How does the board assess the suitability (ex ante) and measure the effectiveness (ex post) of climate-based performance incentives?
  39. Does the organization report on the material financial risks and opportunities associated with climate change?
  40. Does the organization operate in jurisdictions with mandatory climate-related reporting? Is the board aware and informed about potential mandatory climate-related reporting requirements?
  41. Does the organization report against relevant voluntary climate-related reporting frameworks in its jurisdiction (e.g. CDP, TCFD)? If not, has the board considered the potential risks associated with failing to do so ?
  42. How does the board hold management accountable for implementing the regulatory requirements for climate-relevant disclosure and for maintaining oversight of emerging regulation?
  43. How does the board fulfil its duty in relation to the signing or attestation of its climate disclosures in annual reports or financial filings
  44. Does the board feel confident that the level of climate related disclosure is proportionate to the materiality of climate-related risks and opportunities at the company and complies with any mandatory reporting requirements?
  45. Does the board feel prepared to explain its disclosures on climate in response to investor-led challenges?
  46. Is the company reporting on areas where progress has been insufficient and/or where things have not gone to plan (consistent with national corporate governance codes)?
  47. Do disclosures include information about the company’s industry and policy engagement on climate change?
  48. Does the organization have integrated reporting in place?
  49. If not, are there internal or external expectations to pursue integrated reporting in the future?
  50. How does the board ensure that the company develops and encourages climate dialogue and methodology sharing among industry peers, investors, regulators and other stakeholders?
  51. How does the board maintain its awareness about good climate-governance practices?
  52. Does the company organize stakeholder dialogues on this matter and encourage the participation and inclusion of all relevant stakeholders (customers, regulators, NGOs, academia etc.)?
  53. Is the board kept regularly informed of, does it approve, and does it supervise consistent conduct of the company’s industry and public policy engagement?
  54. How does the board ensure that climate risks and opportunities are being adequately discussed with investors, where legal and governance arrangements allow for such a dialogue?

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