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Laura Zizzo is CEO of Mantle314, a climate consultancy, and co-founder of Manifest, a climate software solution

The impacts of climate change are difficult to quantify with imperfect metrics. As a result, climate-related disclosure and related decision-making are suffering. As a recent story in The Globe and Mail noted: “the level of disclosure and standards … are all over the climate map.” This can leave investors bewildered by the inconsistencies between the different metrics that companies use to report on the topic. Yet effective climate disclosure is easier than you think.

It should start with qualitative components, such as governance around climate risk and opportunities, before focusing on quantitative measures, such as emission-reduction targets. The Task Force on Climate-related Financial Disclosure (TCFD) and Canadian securities regulators have emphasized this approach. TCFD-alignment requires disclosure related to governance and the processes around risk identification and management in all cases. Disclosure related to metrics and targets is required only where that information is material to the organization.

Governance and risk management disclosure are currently underreported. A recent study from the Chartered Professional Accountants of Canada conducted by Mantle314 found that while 98 per cent of the Canadian companies reviewed made some TCFD-aligned disclosures, only 48 per cent of these companies discussed board oversight and just 35 per cent outlined management’s role in assessing and managing climate-related risks and opportunities.

This is not surprising given climate risk and opportunity are not consistently managed. Sometimes the issues are the purview of the legal department because management considers climate-change risk as primarily a regulatory or litigation risk. In some cases, it is managed by the communications team because it is seen as a reputation issue. It can also sit primarily within the risk-management department, or the operational team, or others.

Climate change needs to be addressed by relevant head-office departments, but also as part of corporate strategy managed at the C-Suite level. Relevant metrics and targets will vary across sectors and companies; however, good governance should be table stakes. Good governance disclosure is company-specific and provides a sense of authenticity that gives investors comfort because the organization has its attention on fast-moving trends. Climate governance disclosure is currently lacking, but that’s eminently fixable.

The reason that climate is not yet seen as a consistent strategic issue probably lies with the board of directors, who may delegate much of the responsibility for climate-related strategy to management.

According to a recent in-depth legal analysis of directors' duties in a corporate governance context by Hansell LLP, commissioned by the Canadian Climate Law Initiative, directors “may not demur to management or simply wait for management to identify and bring the issue forward. Rather, they must put climate change on the board agenda as more than a discussion point or an education session.” This opinion clearly states that it is squarely within the directors' duty to address climate-change risk, and investors want to know how they are guiding companies toward a more resilient future.

Some companies have begun to plan for this very different future. A good example is Microsoft, which has a “moonshot” plan to be both carbon negative by 2030 and spur climate innovation. Its multifaceted approach will not be achieved just by cutting emissions but also by removing carbon in the atmosphere through protecting forests, biomass energy carbon capture and direct air capture. Cynics say the technology does not exist efficiently or at scale to make a difference. Microsoft has argued that it is because the markets around these technologies are still immature.

Microsoft and others know these innovations need to grow up … fast. They realize an effective and innovative business strategy will include finding and facilitating its clients' climate solutions, and have enlisted the best and brightest to address the climate crisis, at scale.

There are now many blueprints for action on climate disclosure and steps to achieve climate change preparedness, but it has to start with the collective willingness and courage from directors and managers to look beyond quarterly results and existing annual compensation targets, and toward a sustainable, climate-resilient future where leadership accountability must include climate competence.

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