THE TEMPERATURE IS RISING ON EMISSIONS
Looming global risks associated with our changing climate are predicted to raise the frequency and intensity of rising temperatures, storm surges and other weather events. Here Institute of Directors chief executive Kirsten Patterson addresses the implications of climate change pressures on governance.
Looming global risks associated with our changing climate are predicted to raise the frequency and intensity of rising temperatures, storm surges and other weather events. Here Institute of Directors chief executive Kirsten Patterson addresses the implications of climate change pressures on governance.
If you’re a tennis fan, you would have seen players at this year’s Australian Open in Melbourne staggering around barely able to cope with the 40- degree heat. Across the northern hemisphere global warming caused record- breaking heat waves, forest fires, crop failures, and shut down nuclear power plants as river water used for cooling was too warm.
One day in early January, Sydney was the hottest place on earth when temperatures soared to 47.3 degrees. Some countries are predicted to turn to desert as rainfall patterns change. Other countries will confront devastating flooding and some Pacific Islands will disappear under sea. Close to home, temperatures are rising too.
As the sea warms and the polar ice caps thaw, there will be more coastal storm surges in New Zealand’s low lying areas, changing regional weather and warming temperatures. As rising temperatures make some countries too hot to bear, more people may view New Zealand as a paradise they want to live in.
As a country we are committed to the Paris Agreement on Climate Change, to limit global warming to well below two degrees above pre-industrial levels, to the United Nations Sustainable Development Goals, and an Emissions Trading Scheme.
A proposed Zero Carbon Bill from the Labour-led Coalition Government is a significant new policy that’s going to have substantial impact on your businesses as we move to a low-carbon economy.
The Bill will establish a Climate Change Commission to be a strategic leader with advisory and monitoring functions. It will need expert and experienced people able to oversee quality analysis. Other countries including Australia, United Kingdom, Denmark, Finland and Ireland have established similar agencies.
Even if the world can reduce greenhouse gases, New Zealand will still be affected by climate change impacts.
We know from our director sentiment survey last year that 69 percent of directors think environmental and social issues are important to their organisations. A quarter of boards (26 percent) said they were engaged and proactive on climate change risks and practices. That means in 2017, 74 percent of boards were yet to take any meaningful action.
Progressive and forward-thinking leaders will need to be proactive about creating resilience in their organisations as climate pressures emerge, and government ramps up regulations. In July this year 60 New Zealand chief executives from some of New Zealand’s largest companies formed the Climate Leaders Coalition to help our country move to lower carbon emissions.
For you, moving to reduce climate change risks is important to ensure your community and business are sustainable, remain competitive and retain the licence your customers and society give you to operate.
If you are a leader or you set the strategic direction of your organisation, inspiring action now on climate change makes good business sense. There’s a silver lining in every cloud, and some people will see opportunities. Carbonzero soda anyone?
While imbibing said carbon zero beverage directors can consider climate change governance risks and opportunities, and what reporting frameworks are most appropriate for your organisation.
To mitigate or adapt to risks associated with climate change, business leaders should calculate their response to material and financial risks and potential liabilities. Consider risks to property, supply chains, stakeholders, shareholders, and implications on your insurances.
The NZX Corporate Governance Code now asks listed companies to disclose non-financial information regarding environmental, economic and social sustainability risks. Overseas, climate risk is becoming more integrated into financial reporting. Many countries require some organisations, particularly large or listed firms, to make climate related disclosures.
Business plays a critical role in transitioning to a sustainable world. The IoD submitted to the government supporting the intent of a Zero Carbon Bill to establish a long-term approach to climate change in New Zealand and we encourage boards to take the lead in addressing climate change.
As we move to a new low-carbon economy in line with our international commitments, boards need to think strategically and develop plans that integrate a future with lower emissions. If climate change is not on your board agenda, it should be. IoD is a non-partisan voluntary membership organisation committed to driving excellence in governance. It represents more than 8,700 members drawn from listed issuers, large private organisations, small and medium enterprises, state sector organisations, not-for-profits and charities.