Governance
The objective of climate-related financial disclosures on governance is to help users of general purpose financial reports understand the governance processes, controls, and procedures an organization uses to monitor, manage, and oversee climate-related risks and opportunities.
To meet this goal, an organization must share information about:
the governance body or individual responsible for overseeing climate-related risks and opportunities. The organization should name that body or individual and explain:
how responsibilities for climate-related risks and opportunities are included in their terms of reference, mandates, role descriptions, and related policies;
how the body or individual makes sure they have or will develop the right skills and knowledge to oversee strategies for climate risks and opportunities;
how and how often the body or individual is updated on climate-related risks and opportunities;
how the body or individual considers climate risks and opportunities when overseeing the organization’s strategy, major decisions, and risk management processes, including whether they have thought about trade-offs related to those risks and opportunities; and
how the body or individual oversees setting targets for climate risks and opportunities and tracks progress, including if and how performance metrics are part of pay policies.
management’s role in the governance processes, controls, and procedures used to monitor, manage, and oversee climate risks and opportunities, including:
whether this role is assigned to a specific management-level person or committee, and how oversight is handled for that person or committee; and
whether management uses controls and procedures to support overseeing climate risks and opportunities, and how these are connected with other internal functions.
When preparing disclosures to meet the requirements above, an organization should avoid unnecessary repetition. For example, even though the organization must provide the information required above, if oversight of sustainability-related risks and opportunities is handled together, it should avoid duplication by giving integrated governance disclosures instead of separate ones for each risk and opportunity.