Practical Ways Boards Can Embed Climate into a Business Strategy

Companies that embed climate priorities into their business strategies improve their ability to compete, attract capital and connect with stakeholders. This helps organizations become more resilient and sustainable as climate impacts – and the diverse ways companies are being held accountable – continue to intensify. Boards play a pivotal role in this shift and there are practical steps they can take

What an Embedded Climate Strategy Looks Like

Tailored: There is no 'one size fits all' approach. A strategy needs to be tailored to a company and its specific needs and goals. This will vary based on its type of business, industry sector, investor base, supply chains, workforce, and other factors.

For example, the commercial real estate sector may be most concerned with decarbonization of existing and new buildings. Transitioning to zero emission vehicles could be the top priority for transportation companies. The energy industry – which has been a long-time leader in responding to climate concerns – might focus on lowering GHG emissions and investing in renewable power.

A tailored climate strategy is also more likely to lead to meaningful interactions with employees, partners, rights holders, and other stakeholders – and an overall improved environmental performance.

Sustainability and futureproofing: Embedded climate strategies are ones that help sustain and future-proof a business over the long-term. Boards need to think broadly about environmental challenges that may arise in the future and how their company will respond.

The widespread flooding in British Columbia in 2021 shows how important planning can be, as weather events become more extreme and common. The disaster affected companies and their customers in all sectors as vital rail and road transportation infrastructure were blocked and entire communities were inundated. A provincial state of emergency was in effect for two months. 

 Another area where boards can provide direction in climate futureproofing is supply chains. Companies can make climate-related factors a priority when selecting their partners, including shifting to more resilient, sustainable, and legally compliant suppliers. Having sustainable supply chains is growing in importance in all industries. 

Top-down and bottom-up: An embedded climate strategy is both top-down and bottomup. While its development, priorities and communications should come from the top, it should also be integrated throughout the organization so that a climate lens can be applied to all decision making. Meaningful interactions and engagement at all levels can help embed a climate strategy within the organization.

Partnerships and Industry Initiatives 

Indigenous communities: Businesses are increasingly understanding, respecting, and incorporating Indigenous peoples' knowledge and values in managing their environmental impact. This is happening through partnership, engagement, consultation, or other mechanisms. Importantly, Indigenous peoples are identifying and/or leading these efforts. 

Addressing the role of climate in reconciliation is critical for Canadian companies. A wide variety of regulatory and policy actions are underway federally and provincially, including the implementation of the United Nations Declaration of the Rights of Indigenous Peoples. 

Sector and business specific initiatives: Industry associations and self-regulated bodies across Canada have launched sector-specific climate initiatives. Some are long-standing and are regularly updated as issues evolve. 

The Mining Association of Canada continues to add new protocols to its Towards Sustainable Mining initiative, which it launched in 2004. Electricity Canada created the Sustainable Electricity™ program in 2009, where all members must report on their sustainability performance annually.

Canada’s largest oil sands producers announced the Pathways Alliance in June 2021 and continue to work together to address climate change, with the goal of net zero emissions by 2050. The Alliance's six companies operate about 95% of Canada’s oil sands production. 

Looking Ahead 

For companies that have not embedded climate into their core business strategies, time is of the essence. Client demands, regulatory action and the effects of a rapidly changing environment will continue to build. Opportunities will continue to grow as well. Boards can play a leading role in helping companies embed climate in their mission, vision, and values, as well as making it part of their culture