Climate Change

The World Economic Forum Climate Governance Initiative provides a practical route to real change

It is becoming ever more apparent that climate change presents a massive risk to the world economy, and that UK quoted businesses, their operating models and asset values, will be significantly affected both by the physical impacts resulting from global warming, and the risks posed by the transition towards a low carbon economy. The need for change is urgent; significant action must be taken in the next decade if we are to have a chance of restricting global warming to 1.5 degrees, and limiting the worst effects of extreme weather, flooding and drought.

Policies need to be implemented globally in the next 12 years to ensure net zero carbon emissions before 2050. To achieve the goal emissions, which are currently still rising, they need to peak as soon as next year.

For UK plc there will be winners and losers. Those companies which give proper consideration to the risks and opportunities presented by this challenge are likely to:

• attract capital from an increasingly conscious investor base• become employers of choice for climate-aware employees• have a brand proposition which appeals to concerned consumers• develop resilience which protects them from the physical impacts and protects asset values• take advantage of the business opportunities of the low carbon transition.

Taking the Lead

To encourage boards to debate these matters, and develop their strategies to deal with the risks and take advantage of the opportunities, the World Economic Forum (WEF) under its Climate Governance Initiative has developed a set of principles for good board governance on climate change. WEF is also encouraging the formation of individual country director networks around the world to help put these principles in place and accelerate action on the net zero carbon challenge.

The UK has taken the lead. A group of non-executive directors, who share a concern for both the financial and environmental issues at stake, have established Chapter Zero, a network of chairs, audit chairs and other non-executive directors to help move the agenda forward as a business issue. Chapter Zero was launched in the summer of this year, and already more that 250 directors have enrolled as members; business leaders who wish to become better informed on the implications of climate change for their companies and ensure there is a well-informed discussion in the boardroom.

Chapter Zero is...