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The clamor for attention to climate change as a financial risk has become more urgent, and boards of all companies, irrespective of size or industry, need to take note. The urgency is driven by a confluence of factors, most visible of which are the accelerating physical impacts—manifested in increasingly frequent and severe floods, wildfires, rising sea levels, and droughts—as well as concern by many experts that the window for preventing more dire long-term consequences is rapidly closing. Investors are keenly interested in understanding whether boards have the knowledge and processes to oversee management’s navigation of climate-associated financial risks and to provide informed, proactive guidance as stewards of long-term value.

Other stakeholders, including employees, customers, and communities, are voting with their wallets and their feet against companies they perceive as contributing to the problem. And spurred by increasing public demand, both U.S. and international regulatory bodies are working to drive change.

The COVID-19 pandemic has demonstrated that boards that are informed, communicative, and bold in their leadership can guide their companies to not only weather the storm but also grow stronger and more competitive. The tectonic shifts in the business landscape driven by climate will demand similar board skills. With current and longer-term climate realities in mind, boards can guide their companies to adapt, mitigate risk, and uncover new opportunities for value creation.

But with such a complex topic, where should boards start? This paper, coauthored by the ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø Board Leadership Center (BLC) and Plan C Advisors, addresses six climate-related areas that are critical to board oversight. We present a framework for board oversight as well as insights from current board directors and business leaders in a range of industries. We hope that this paper is useful in framing your board’s guidance and oversight—for the good of your companies and all stakeholders.