For the 22nd year in a row, Report on Business will rate the work of Canada’s corporate boards using a rigorous set of governance criteria designed to go far beyond minimum mandatory rules imposed by regulators.
This year, The Globe and Mail has committed to publishing the marking criteria prior to the release of the Board Games report, which will occur later this year.
The Globe’s data partner, Global Governance Advisors, will examine the boards of directors of companies and trusts in the S&P/TSX Composite Index to assess the quality of their governance practices and disclosure.
In 2022, The Globe made a number of major changes to Board Games criteria, including removing many questions for which the overwhelming majority of companies – roughly 90 per cent or more – received full credit. The Globe also reallocated several marks to other questions, particularly those about diversity. And it raised thresholds in those areas and others.
In 2023, there are fewer changes. There are two new criteria, however, on matters related to board oversight of climate issues, a first for Board Games. The questions examine whether a board has at least one director with climate expertise and whether companies provide climate-related education sessions to their boards.
To make room for the new criteria, which bring the total Board Games criteria to 34, The Globe reallocated points from some of the criteria in place in 2022.
Board Games Methodology for 2023
Board Composition, 1 through 10, worth 38 marks out of 100
1. Board independence
SIX marks for boards with at least two-thirds independent directors.
THREE marks if more than 50 per cent of directors are independent.
ZERO marks if there is a majority of non-independent or related directors.
For a director to qualify as independent as measured for this question, the director must have no links to the company beyond their role as a director. That means that they are not:
- executives/employees;
- relatives of executives/CEO;
- executives/employees of a parent/sister/subsidiary company that controls the company;
- former members of management at the company or a parent/sister/subsidiary company within the previous five years;
- people whose firms do business with the company, regardless of compensation amount, including, for example, lawyers, accountants, suppliers, consultants, advisers or investment bankers;
- paid extra compensation by the company for providing non-board services, such as consulting work;
- controlling shareholders (at least 30 per cent voting power) or related to the controlling shareholder of the company.
2. Splitting the role of chair and CEO
FOUR marks if the roles are split and there is a fully independent chair.
TWO marks if they are split, but the chair is a related director.
ONE mark if they are split, but the chair is a member of management.
ZERO marks if the roles are not split.
Any company with fewer than full marks will receive ONE additional mark if there is a lead independent director on the board.
3. Participation on other boards
3. (a) CEOs sitting on other boards
ONE mark if the CEO sits on the board of no more than one other publicly traded company.
ZERO marks if the CEO sits on two or more boards.
For the purpose of this question, a related company such as a subsidiary does not count against the CEO.
3. (b) Directors sitting on other boards
ONE mark if no directors sit on four or more public company boards.
ZERO marks if any director sits on four or more public company boards.
There is no exception for related-company boards.
4. Representation of women on the board
4. (a) Number of women on the board
FOUR marks if more than 33 per cent of directors are women.
TWO marks if 25 per cent to 33 per cent of the board are women.
ONE mark if two members of the board are women, regardless of proportion.
ZERO marks regardless of proportion if the board doesn’t have at least two women.
4. (b) Policies on women directors
Does the company describe how it considers the representation of women for the board of directors?
THREE marks if the company discloses details of its policy and includes an internal target for the proportion of women on the board, with specifics of the target details and a timeline for achieving the target.
ONE mark if the company discloses details of a process used to consider the representation of women on the board, such as recruitment practices aimed at ensuring female candidates are considered for board seats, but doesn’t have a target or doesn’t disclose a timeline for achieving a target.
ZERO marks if the company doesn’t have a diversity policy or doesn’t describe specific steps it takes to ensure gender diversity is reflected in recruitment. That means ZERO marks if a policy mentions several types of diversity without disclosing any specific measures related to improving the representation of women.
Note: Companies that have a target and have already met it do not have to have a timeline for achieving their target. Also, companies with at least 40 per cent women on the board will receive THREE marks even if they have not adopted a formal target.
5. Diversity
5. (a) Representation other than women
FOUR marks if a company explicitly discloses it has more than one board member who self-identifies as Indigenous, a member of a visible minority, has a disability or is LGBTQ+, and the company specifies which groups the members belong to.
THREE marks if a company explicitly discloses it has more than one board member who self-identifies as Indigenous, a member of a visible minority, has a disability or is LGBTQ+, but the company does not specify which groups the members belong to.
TWO marks if a company explicitly discloses it has one board member who self-identifies as Indigenous, a member of a visible minority, has a disability or is LGBTQ+, and the company specifies which group the member belongs to.
ONE mark if a company explicitly discloses it has one board member who self-identifies as Indigenous, a member of a visible minority, has a disability or is LGBTQ+, but the company does not specify which group the member belongs to.
In identifying specific groups, the company may use a narrative or a board diversity matrix. The company cannot rely on shareholders looking at pictures of the directors to evaluate diversity. The company does not need to name the specific directors in each category as part of this disclosure.
5. (b) Consideration of board diversity other than the representation of women
TWO marks if the company discloses details of a process used to consider potential board candidates who self-identify as either Indigenous, a member of a visible minority, has a disability or is LGBTQ+. Processes such as a target for board representation, required proportion of potential candidates in recruitment, inclusion on an evergreen list of potential candidates or mandating search firms to ensure that these types of diverse candidates are included.
ZERO marks if the company doesn’t have a diversity policy or doesn’t describe specific steps it takes to ensure diversity, other than the representation of women, is reflected in recruitment. That means ZERO marks if a policy mentions several types of diversity without disclosing any specific measures related to improving diversity, other than the representation of women, or simply states that the board considers diverse candidates other than women.
6. Board performance evaluation systems
THREE marks if there is a formal board evaluation and a formal individual director evaluation, including peer review, with detailed disclosure of what sort of process is used for both.
TWO marks if there is a formal board evaluation and director evaluation, but no peer review. Or TWO marks if the company has a formal peer review process but does not mention or describe any board or committee review process.
ONE mark if there is a formal board assessment, but not an assessment of individual directors, or if there is reference to a director assessment but not board or committee review.
ZERO marks if there is no evaluation or there is only a vague description of how the assessment is done with no details of the process used.
7. Independent directors meeting without management
FOUR marks if they meet without management at every board meeting, including special meetings and not just regularly scheduled meetings.
TWO marks if they meet without management at regular board meetings, but not all board meetings.
ONE mark if they meet sometimes, but not every regular board meeting.
ZERO marks if there is no mention or if there are no meetings without management. Also ZERO marks if the company uses vague wording – for example, that “time is available for in-camera meetings” – that do not specify whether the meetings are actually held.
8. CEO succession planning
TWO marks if the company discloses the process the board uses to manage succession planning for the CEO’s job.
Disclosure must go beyond simply noting that the board or one of its committees is responsible for managing succession planning. There must be evidence a formal process is in place and some detail of how the board approaches the task must be given.
9. Director education processes
TWO marks if the company fully describes director education processes, including details of each specific training session it held and who attended during the fiscal year. Director education can include, but is not limited to, educational events offered to the entire board during the year, site visits to company facilities by directors, or specifics about special briefings, courses or training offered to some or all directors. Management update presentations are not considered training sessions for the purpose of this question.
To be clear, the company will not be awarded TWO marks for additional details if the company simply lists educational topics without giving details of the specific training sessions, because it is unclear whether the topics were dealt with separately at specialized training sessions, or at a single training session during the year, or during a regular board meeting. It is also insufficient to list training topics “offered” or “available” to the board if the disclosure is not clear whether the training actually occurred and who attended. The company does not have to list each name if it says everyone on the board or a specific committee attended, but does have to disclose details of who attended if the session was attended by a smaller number of directors and not the entire group.
ONE mark if the company gives a full description of education processes but leaves out some details about events and who attended.
ZERO marks if no training is disclosed or if there is so little detail that it is unclear what training occurred.
10. Retirement and term-limit policies for directors
TWO marks if it has a retirement-age or term-limit policy for its directors and it specifically says the age and/or length of service that triggers a director’s departure.
ZERO marks if no disclosure or it has no retirement-age or term-limit policy for its directors.
Note: The disclosure must be explicit, and marks will not be given for generic statements about board renewal that do not specifically mention retirement-age or term-limit policies.
Shareholding, 11 through 16, worth 13 marks out of 100
11. Director share ownership requirements
THREE marks if a requirement for a director to own shares or share units is equal to at least three times the retainer paid to directors (calculated as the value of cash payments and equity grants) – including the value of grants of shares or share units – and if there is a time frame disclosed for directors to reach their ownership requirement and return to the required level if they fall below.
TWO marks if there is a requirement, but it is lower than three times the value of the retainer and share units.
ONE mark if the company allows directors to meet their ownership value by using a measure other than the current market value of their equity – such as using a historic average value or using the acquisition value of equity at the date it was first obtained. This is because these values over time can lead to lower actual share ownership by directors when the share price declines.
ONE mark if the company allows stock options or types of share units that have not yet been earned by directors to be counted toward share ownership requirements.
ZERO marks if there is no share ownership requirement.
12. Disclosure of directors’ equity holdings
TWO marks if the company discloses the total market value of each director’s holdings, excluding options; the market value or number of shares held; the number or market value for each type of equity instrument held; and the number or market value of vested and unvested restricted share units (RSU) or performance share units (PSU).
ONE mark if the company discloses a total market value of each director’s holdings, excluding options, and the share or equity count, but it is unclear from the disclosure the number of each type of equity instrument held and whether it has vested.
ZERO marks if no or if the total includes options. Also ZERO marks if the disclosed share ownership level of each director is not the current market value, but is instead a historic value, such as the value when the shares were acquired or a historic average price.
Companies can calculate the ownership value using an average share price for the prior 30 days, but the average must be used consistently each year and not only when an average increases the share ownership level.
13. Explanation of directors’ equity ownership versus guidelines
ONE mark if the company clearly explains how each director’s share ownership meets (or fails to meet) a required share ownership guideline. The disclosure must show the number or value of shares required to be owned, the director’s equity ownership level and must explain how the ownership compares to the requirement as a percentage, multiple or dollar value.
Note: Simply disclosing whether a director has met the requirement is not sufficient. The ownership must be presented in the same units as the requirement, allowing shareholders to better interpret each director’s investment in the company compared to the guideline. For example, if directors are required to own a certain dollar value of shares or a specific number of shares, the chart should compare the requirement to the actual ownership in those units.
ONE mark all the elements are clearly presented.
ZERO marks if any of the elements are not disclosed for each director. Also ZERO marks if there is no share ownership requirement for directors. And ZERO marks if the disclosed share ownership level of each director is not the current market value, but is instead a historic value, such as the value when the shares were acquired or a historic average value.
14. CEO share ownership requirements
THREE marks if there is a requirement to own at least five times the base salary in shares held directly or fully vested RSUs, PSUs or other non-option instruments.
THREE marks if the CEO is the company’s controlling shareholder.
ONE mark if there is a requirement to own two to five times the base salary, or if the CEO can meet the ownership requirement by using a measure other than the current market value of the shares, such as a historic average or the acquisition value of the shares, or if unvested RSUs, PSUs or other non-option instruments count toward the total.
ZERO marks if there is no requirement, or if the requirement is less than two times the base salary, or if any stock options can be counted toward the total.
15. Named executive officer share ownership requirements
TWO marks if there is a requirement for other named executive officers (those officers whose compensation is included in the proxy circular) to own at least one times the base salary in shares.
ZERO marks if there is no requirement, or if the requirement does not apply to all named executive officers, or if it is less than one times the base salary.
16. Disclosure of CEO’s equity holdings
TWO marks if the company discloses the current market value of shares and share units (including RSUs) owned by the CEO in one location in the proxy circular. The company must break down how much of the total comes from each type of holding. The value of PSUs and stock options does not have to be included in the list because their ultimate value is uncertain, but there will be no deduction if they are included as separate items if they are clearly explained.
ONE mark if the company includes the total value but does not break out the separate components. Or ONE mark if different types of share units are included together in one item when they include PSUs, whose future value is uncertain or unknown.
ONE mark if options are included in the total but the company does not explain how they were valued, such as whether the total is based on a mathematical estimate of the future value of all outstanding options, or whether the total includes only the value of options that are currently vested and/or in the money.
ZERO marks if the equity value is not disclosed or if the total does not include the value of all shares and share units. Also ZERO marks if the disclosed share ownership level for the CEO is not the current market value, but is instead a historic value, such as the value when the shares were acquired or a historic average price.
Companies can calculate the ownership value using an average share price for up to the prior 30 days, but the average must be used consistently each year and not only when an average increases the share ownership level.
Compensation, 17 through 27, worth 26 marks out of 100
17. CEO bonus plans
17. (a) Percentage weightings
ONE mark if the company provides a percentage weighting of the factors considered in determining the CEO’s bonus.
ZERO marks if it provides an overall weighting for “corporate performance,” but fails to provide specific weightings for specific metrics used to measure corporate performance. Also ZERO marks if it provides no weightings.
17. (b) Target specifics
ONE mark if the company provides the specific targets for all goals in the annual bonus plan that are based on financial metrics.
ZERO marks if the company names financial measures but fails to disclose the specific targets. Also ZERO marks if it provides no measures or targets.
17. (c) Performance outcomes
ONE mark if the company explains the outcome of what actually happened with performance goals and how the outcome affected the CEO’s bonus.
ZERO marks if it does not.
17. (d) CEO bonus performance threshold
ONE mark if the CEO can receive no bonus if performance does not meet a minimum performance threshold under the bonus plan design. This addresses investor concerns that some bonus programs virtually guarantee at least some level of payout even when performance is weak, eroding the value of bonuses as rewards for good performance.
ZERO marks if the company says there is a non-zero minimum bonus. Also ZERO marks if the disclosure is not clear about whether a portion of the bonus can be paid whatever the performance.
18. Peer comparisons in compensation decisions
18. (a) Use of a peer group
ONE mark if the company uses relative financial performance metrics, making performance against that of the company’s peers a factor in determining payouts for the CEO’s cash bonus, PSUs or performance stock options.
This means compensation is affected by a company’s performance relative to peers, and not just in absolute terms. It addresses concerns that executives can underperform compared to their peers, but still earn market-competitive bonuses that indicate high performance. Using relative performance metrics does not mean benchmarking total pay to peer group compensation levels, but measuring incentive payouts according to relative performance. For credit, relative metrics can be used to either pay current year cash bonuses and equity (restricted stock or option) grants, or as performance hurdles for grants of PSUs or performance vesting options.
ONE mark if the CEO does not participate in any short-, medium- and long-term incentive plans due to extensive current share ownership.
ZERO marks if payouts are not based on relative performance metrics.
18. (b) Peer group composition
ONE mark if the company discloses the composition of the peer group used for comparing relative performance. For example, if relative total shareholder return is a performance metric, does the company disclose the peers that TSR is measured against?
ZERO marks if it does not disclose the composition or does not use a peer group.
Note: An established stock index will be considered a peer group so long as the company does not modify it without disclosing the additions or deletions. If the company only uses a peer group for setting its general pay levels, and not for measuring this year’s performance achievements to determine incentive payouts, then ZERO marks will be given.
18. (c) Peer group design
ONE mark if the company explains the rationale for the peer group it has chosen for measuring its comparative performance for equity payouts. For example, a company might say peer group members are similar-sized companies, or operate in the same industry, or have similar business characteristics. The criteria itself is not scrutinized, but it must be provided.
ZERO marks if it does not explain. Also ZERO marks if the company only uses a peer group for setting its general pay levels, but not for measuring this year’s performance achievements.
19. Performance-based stock awards
19. (a) Performance hurdles
TWO marks if are there performance hurdles attached to stock options or share units representing at least half the value of the grants in the fiscal year. Performance hurdles are any financial, operational or stock-price metric that must be met for awards to vest, as opposed to time-based vesting based on continued employment. The company must disclose a valuation for each component of its equity awards to facilitate this evaluation.
ONE mark if more than half the value of stock awards is purely time-based, but some of the awards have performance hurdles. Or ONE mark if the proportion of the awards is not explicitly disclosed, but some awards have performance hurdles.
ZERO marks if there are no performance-based criteria attached to any stock option or share unit awards.
TWO marks if the company never pays the CEO with options or share units.
19. (b) Potential for zero payout
TWO marks if there can be no payout for the CEO’s performance-based options or PSUs. This addresses investor concerns that metrics for some PSUs allow some level of payout under any scenario, even when performance is weak. There must be the possibility for no payout as part of the compensation formula. It is not acceptable that no payout can only occur if the board applies discretion because no clear performance threshold is disclosed and it is unclear whether this will occur.
ZERO marks if there is a guaranteed minimum payout which effectively means part of the award vests based on time only.
TWO marks if the company never pays the CEO with options or share units.
20. Historical compensation disclosure
ONE mark if the company provides a “look back” or “back testing” table in the proxy circular showing how much the CEO has earned over the past five years from all compensation elements, including long-term features such as stock options and share units. The table must show investors how the CEO’s actual pay compared to the intended compensation reported at the time of granting.
The chart should show all long-term pay elements with an annual breakdown showing the amount awarded in each year over the past five years, and how the actual payout outcome compares to the intended compensation for each year over the past five years.
ZERO marks if no information is provided or if it does not include all pay elements.
Note: If a new CEO has been on the job for less than a year, ONE mark even if there is not a “look back” chart. For CEOs with more than one year but less than five years of tenure, the “look back” chart should cover their full period on the job.
21. Stock option gains
ONE mark if the company discloses the gains reaped by executives from exercising stock options over the prior year.
ZERO if it does not.
22. Cost of compensation comparisons
ONE mark if the company discloses the total cost of compensation to the top executive team compared to a financial metric such as income or revenue. It is not acceptable to only provide disclosure that compares the cost of compensation to the rate of share price growth. This is because comparison to a financial metric such as income makes it clear how much the compensation costs relative to the company’s financial resources. The calculation should show a percentage, and not an approximation such as “less than 1 per cent of revenue.”
ZERO if it does not.
23. Compensation clawbacks
TWO marks if the company has a provision to claw back bonus payments to the CEO if wrongdoing is discovered. The policy must allow directors to claw back payments for anything the board determines to constitute wrongdoing.
ONE mark if there is a policy, but claw-backs can only be ordered if the company’s financial statements have been restated due to wrongdoing.
ZERO marks if there is no policy.
24. CEO share-holding periods
ONE mark if the company has a holding period for shares after a CEO leaves the company to ensure there is a performance “tail” to the CEO’s work. This is an incentive to make good long-term decisions prior to departure. Minimum requirement is a one-year holding period after leaving the company.
ZERO if it does not.
25. Double-trigger severance requirements
Note: Double-trigger provisions require both a change of control of the company – the first trigger – and a termination event – the second trigger – for a severance payment and/or option award vesting to be accelerated. The company’s provisions cannot provide for payouts or accelerated option vesting based on the board’s discretion or if the termination event includes provisions for voluntary termination, resignation or resignation for “good reason” without disclosing the “good reason” definition outlined in an employment agreement or agreements.
ONE mark if the company requires a double trigger before paying compensation and permitting equity units to vest for top executives upon a change of control of the company. Such a rule means executives don’t automatically receive payments when a company’s ownership changes unless they also lose their jobs.
ZERO if there is no double trigger.
ONE mark if the company has no change-of-control payment provisions.
ZERO marks if the company allows executives to resign voluntarily after a change of control and still receive payments, unless the permitted circumstances are detailed in the proxy circular. Such reasons might include a material change in responsibilities or a relocation of a job, but they must be specified in the proxy. Companies cannot simply state that executives can resign for “good reason” and receive severance payments.
26. Stock option compensation
26. (a) Excessive dilution
Dilution is based on “overhang,” or the number of options outstanding at the company’s fiscal year-end, as well as the number of options approved for future issuance, expressed as a percentage of all shares outstanding. If a company has more than one class of shares, dilution is measured for whichever class of shares is diluted by the outstanding options.
THREE marks if the dilution is less than 3 per cent of outstanding shares, or if the company has no option plan.
TWO marks if the dilution is between 3 and 5 per cent of outstanding shares.
ONE mark if the dilution is between 5 and 8 per cent of outstanding shares.
ZERO marks if the dilution is more than 8 per cent. Also ZERO marks if the company has adopted an evergreen option plan that automatically “reloads” the number of options available for issuance – even if the option dilution level falls within the guidelines listed above. And ZERO marks if the company has repriced any of its options within the prior year.
26. (b) Excessive grant rates
TWO marks if the number of options granted in the prior fiscal year was less than 1 per cent of all shares outstanding.
ONE mark if the grant rate was between 1 and 1.5 per cent.
ZERO marks if the grant rate exceeded 1.5 per cent annually.
26. (c) Vesting period for CEO options
TWO marks if no options vest prior to the first anniversary and at least some of the options vest on the fifth anniversary of the grant. This encourages a long-term focus by management.
ONE mark if all options vest no earlier than the first anniversary of the grant.
ZERO marks if any options vest prior to the first anniversary of the grant.
TWO marks if the CEO does not receive options.
27. Performance-based director pay
ONE mark if the company does not pay directors using stock options or performance-based compensation, such as PSUs or cash bonuses. (This does not include shares or share units that are not contingent on reaching performance goals.)
ZERO marks if it uses options or performance-based compensation.
Shareholder rights, 28 through 32, worth 19 marks out of 100
28. Shareholder voting rights
This section looks at voting rights in two steps, first assessing whether there are non-voting or subordinate voting shares, then assessing whether there are other types of unequal voting rights.
Companies with equal voting rights for all shareholders can score a maximum of 10 marks.
Companies start with 10 marks if they have no dual-class shares. If the common shares available on a major exchange are subordinate voting shares, marks are reduced depending on the gap between the percentage of votes controlled by the superior voting shares and the percentage of the company’s equity they represent, using the following guidelines:
FOUR marks if the vote-to-equity ratio is less than 3:1.
THREE marks if the ratio is between 3:1 and 4:1.
TWO marks if the ratio is between 4:1 and 5:1.
ZERO marks if the ratio is 5:1 or worse. Companies that offer subordinate shareholders zero votes for board director elections will receive ZERO marks regardless of the vote-to-equity ratio.
If the company has no dual-class shares, we will then review two other issues related to voting rights, each worth a maximum of FIVE marks.
The first issue is whether shareholders can elect the whole board, or whether some directors are appointed (by a shareholder or manager, for example) and their names don’t appear on the proxy ballot.
FIVE marks if all directors are elected.
THREE marks if one director is appointed and not elected.
TWO marks if more than one is appointed, although not a majority.
ZERO marks if a majority are appointed and not elected.
The second issue looks at whether any party – an administrator, manager or shareholder, for example – has rights unequal to ownership. For example, can anyone nominate directors out of proportion to ownership? Can anyone veto key issues – such as changes to senior management or assets sales and purchases – without owning a majority of the shares?
FIVE marks if all rights are equal.
THREE marks if a party has disproportionate rights compared with ownership stake.
ZERO marks if a party has rights that have little or no relationship to ownership stake.
29. Say-on-pay
FOUR marks if the company gives shareholders an advisory vote on executive compensation (known as say-on-pay). If the company received less than 80 per cent support on its say-on-pay vote in the prior year, it must clearly explain in its proxy circular what changes it has made to its compensation plan.
ONE mark if there is a vote but the company has not explained its response to a low vote in the prior year.
ZERO marks if there is no vote.
30. Shareholder engagement
TWO marks if there is a description of a shareholder engagement process outlined in the proxy circular and if the company provides information about how to directly contact the board. The proxy circular needs to offer details or examples of specific things the company has done to engage with shareholders, beyond inviting shareholders to attend the annual general meeting. The contact information must include a way to reach the board directly, such as an e-mail or postal address for the board or the chair of the board. It is not sufficient to only provide indirect contact information, such as including the company’s general mailing address in the proxy circular or directing investors to the company’s website.
ZERO marks if no shareholder engagement process is described in the proxy or if there is no board contact information.
31. Related-party transaction governance
TWO marks if the company identifies a board committee responsible for reviewing related-party transactions and provides disclosure of policies that govern them, such as defining related parties or addressing how the company evaluates the value of transactions. Disclosure must be more robust than simply stating that directors must declare if they have a material interest in a transaction and recuse themselves from discussions.
ZERO marks if a company merely states there were no related-party transactions, but does not identify its committee or policies.
32. Annual general meeting voting results
ONE mark if the company discloses in its shareholder proxy circular the voting results for directors in the prior year’s board elections, as well as the results for the company’s say-on-pay vote if one was held in the prior year. Such disclosure assists investors in easily reviewing voting information that can otherwise be complicated to access. ONE mark if the company did not have a vote for directors in the prior year because it is a newly public firm.
ZERO marks if no. Also ZERO marks if the company reports the voting result, but nominates a director for election in the current year who did not receive a majority of “for” votes in the prior year’s board election.
Environment, 33 through 34, worth four marks out of 100
33. Board responsibility for the environment
TWO marks if the company describes how its board considers climate issues. The disclosure should identify a board committee or committees responsible for climate policy and/or describe how and how often other board committees consider climate-related issues, including as they review strategy, risk management and operating performance. Companies cannot get credit if the committee responsibilities are described broadly, such as “ESG” or “environment”; disclosure must be climate-specific, using words or phrases such as “climate change,” “global warming,” “greenhouse gases” or “carbon.”
34. Climate board expertise and training
34. (a) Climate expertise
ONE mark if the company includes climate expertise as a “required skill” in the board skills matrix and at least one director is attributed with climate expertise.
34. (b) Climate training
ONE mark if at least one education session provided to the board or a board committee during the fiscal year is a climate-related session. Companies cannot get credit for education described as “ESG” or “environment”; disclosure must show the education is climate-specific, using words or phrases such as “climate change,” “global warming,” “greenhouse gases” or “carbon.”
David Milstead