New guidance to help investors and corporate directors engage effectively on climate governance

Released today, the updated 2024 Ceres Guidance for Investor Engagements with Directors on Climate Risk Governance is a resource for investors to guide engagements with U.S. corporate directors to better understand board oversight of the financially material risks and opportunities associated with climate change.  

“U.S. financial markets are navigating the complex task of responsible decarbonization. Within this context, directors of U.S. public companies bear a distinct legal duty, separate from management's role, to ensure that critical questions are both asked and answered of management regarding their companies' financially material climate-related risks and opportunities,” said the Rev. Kirsten Snow Spalding, Vice President, Investor Network, Ceres. “These directors should be able to explain to their investors and other stakeholders how they exercise this oversight, and how such risks and opportunities are incorporated into the long-term strategies of the companies on whose boards they sit.” 

 Climate risk poses financially material risks to companies and systemic risks to investors’ portfolios. Therefore, reliable and comparable public disclosures about the systems and processes in place at the board and senior management levels to oversee climate-related risks and opportunities are essential for investors to properly evaluate and understand the value of a portfolio company’s business. 

Ceres’ new guidance builds on its 2022 version and the current and anticipated climate disclosure frameworks and regulations in the U.S. and abroad to incorporate key elements of effective climate governance. Specifically, it includes additional steps that investors have typically considered when engagements with directors of their portfolio companies do not progress in a meaningful way. These approaches are based on the roles and responsibilities of the board of directors, which are distinct from those of management. 

While Ceres’ guidance serves as a resource for investors, companies may also want to use this guidance to prepare for stakeholder engagements and to help inform their public disclosures and practices to align with the direction in which all U.S. public companies should be moving on their respective journeys to decarbonize.  

“Strong corporate climate governance remains critical given the systemic impacts of climate change across business operations and supply chains, investment portfolios, and the broader economy,” said Rob Berridge, Senior Director of Shareholder Engagement, Ceres Investor Network, Ceres. “Boards need to ensure their companies have the right policies, procedures, and personnel in place to enable robust oversight of these profound impacts.” 

The guidance also provides a new Appendix with sector-specific sample questions, to prepare both investors and independent directors to engage more effectively on climate-related risks and opportunities, as well as to produce more reliable and comparable public disclosures. It covers five areas including board oversight of decarbonization plans, audit committee oversight of climate-related risks, board oversight of voluntary and upcoming mandatory climate-related disclosures, climate-related lobbying governance, and board-level capabilities to oversee such topics.    

“This updated guidance, now with sector-specific sample questions, equips investors and independent directors with practical tools to engage more effectively on climate-related risks and opportunities,” said Rhonda Brauer, founder & president of RLB Governance and former corporate secretary & governance officer at The New York Times Company, who consulted for Ceres on this initiative. “We look forward to seeing how corporate boards use the guidance to better inform their climate-related oversight responsibilities."  

Read the full report here.

About Ceres 

Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and sustainable world. United under a shared vision, our powerful networks of investors and companies are proving sustainability is the bottom line—changing markets and sectors from the inside out. For more information, visit ceres.org.