Asking Questions about Climate Risk

This blog shows how to approach climate risk through a governance lens, with thoughtful questions about material issues that affect strategy, risk, and organizational resilience.

For some boards, climate change feels like someone else’s issue.

Maybe it seems relevant to governments, energy companies, insurers, or large multinational corporations, but not to your organization. Think again!

Climate-related issues appear in many forms – supply chain disruptions, rising insurance costs, infrastructure impacts, changing expectations, shifting regulations, and more. Whether your organization is large or small, for-profit or non-profit, privately held or publicly traded, these issues can affect you.

You don’t need to be a climate expert to fulfill your fiduciary duty, but you do need to understand how climate-related risks and opportunities could affect your organization.

Directors don't need climate expertise. They need climate curiosity.

Climate Is a Governance Issue

CLIMATE RISK OVERSIGHT
An emerging governance responsibility
Assess impacts, challenge assumptions, and support organizational resilience.

Climate change used to be viewed primarily as an environmental issue. Today, boards increasingly view it through a governance lens. Regulators, lenders, insurers, investors, and other stakeholders expect boards to understand how climate-related risks affect their organization’s performance and long-term sustainability.

In terms of climate change, organizations face physical risks, transition risks, or both.

• Physical risks are events such as flooding, wildfires, extreme heat, drought, or severe storms.
• Transition risks arise as the operating environment evolves in response to climate concerns. Examples include regulatory changes, technology, and consumer preferences.

Climate-related issues, whether physical or transitional, can affect:

• Operations, facilities, and infrastructure.
• Insurance costs and financing needs.
• Supply chains and business continuity.
• Talent attraction and retention.
• Stakeholder expectations.
• Disclosure and reporting requirements.

The board’s role is to ensure management identifies, assesses, and responds to material climate-related risks and opportunities. Climate-related oversight can be viewed through different governance lenses: risk exposure, strategic impact, organizational resilience, and emerging opportunities.

Climate issues are rarely stand-alone. They usually appear within discussions about strategy, risk, opportunities, or resilience.

Your Organization’s Climate Exposure

For directors in any type of organization, the key question isn’t whether climate change matters globally, but how it could affect their organization’s ability to achieve its mission, execute its strategy, and remain sustainable over the long term.

Climate risks and opportunities show up in different ways, depending on the organization. Here are just a few examples:

• Financial Institutions. Climate-related events can influence property values, loan portfolios, insurance availability, and customer/member financial well-being. Boards need to consider how these factors affect lending practices, risk management, and long-term performance. When banks, credit unions, and insurance companies react to these issues, the effects cascade down to their customers in the form of higher costs.
• Co-operatives and Member-Owned Enterprises. Many co-operatives depend on physical infrastructure, regional supply chains, agriculture, transportation systems, or resource availability. Potential concerns include operational disruption, supply chain vulnerabilities, member impacts, and long-term planning assumptions.
• Professional Associations. Climate-related issues can affect conferences and events, facilities, travel requirements, member expectations, and strategic priorities. Changing regulations and client expectations create both opportunities and challenges for members.
• Non-Profit and Community Organizations. Charities and community organizations face increased service demands, disrupted operations, facility impacts, and pressure on limited resources. Climate-related events can simultaneously increase community needs while straining organizational capacity.
• Manufacturing, Transportation, and Other Businesses. Potential impacts include supply chain disruptions, extreme weather events, energy costs, facility risks, workforce considerations, and changing customer expectations. On the other hand, climate-related trends may also create opportunities for innovation, efficiency, and growth.

 
Oversight Should Be Proportionate

Not every organization faces the same degree or type of climate-related exposure. It’s important to understand what’s material to the organization and its stakeholders. For some, the impacts are significant and immediate. For others, they’re indirect, gradual, or long-term in nature.

How could climate change affect your organization's ability to achieve its mission, execute its strategy, and remain resilient?

Climate Questions for Boards

Rather than trying to be experts on climate science, directors are better served by asking the right governance questions.

1. How Could Climate-Related Events Affect Us?

Start with the basics. What aspects of the organization could be vulnerable? The goal is to move the discussion from a broad global issue to specific impacts. Consider:

• Facilities
• Operations
• Supply chains
• Service delivery
• Employees, members, customers, or beneficiaries

Examples:

• A non-profit might not feel exposed to climate risk. Yet extreme weather could disrupt programming, rising insurance costs could affect operations, wildfire smoke could impact staff, and changing donor priorities could influence funding.
• A manufacturer will probably face supply chain disruptions.
• An association might need to adapt events to changing weather patterns and member expectations.

2. What Assumptions Have We Made?

In the face of climate change, boards need to be aware that the future may not resemble the past. Governance failures often begin with assumptions that are no longer valid. Ask:

• What assumptions are built into our strategy?
• How could changing weather patterns affect us?
• How might regulations evolve?
• How could stakeholder expectations change?

Boards don’t need perfect forecasts to exercise good oversight.

3. How Resilient Are We?

ORGANIZATIONAL RESILIENCE
Preparing for disruption before it occurs
Strengthen operations, resources, and recovery capabilities.

Climate-related events often test the organization’s ability to adapt to changing circumstances or recover from unexpected events. Consider asking questions such as:

• How prepared are we for operational disruptions?
• How effective are our business continuity plans?
• When and how did we last test our emergency responses?
• How quickly could we recover from a major disruption?

4. What Climate Risks Are on Our Risk Register?

Boards routinely oversee financial, operational, cyber, and strategic risks. Climate-related risks should be examined through the same governance lens, ensuring they’re well integrated into risk mitigation processes. Ask questions such as:

• How do we identify the relevant risks?
• How are they monitored?
• Who reports on them?
• How often does the board receive updates?

5. Are We Overlooking Opportunities?

Board discussions often focus on risk. But governance also involves opportunity. A discussion that focuses only on threats may miss important possibilities. Depending on the organization, climate-related trends may create opportunities through:

• New products and services
• Operational efficiencies
• Access to funding or partnerships
• Reputation and stakeholder trust
• Talent attraction
• Innovation opportunities

6. Are We Getting the Information We Need?

Effective board oversight depends on quality management reports. Directors should ask:

• What climate-related information does management provide?
• What indicators are being monitored?
• Is the information useful for decision-making?
• What additional information might help the board?

“Don’t debate the label; scrutinize the substance. Ask management to demonstrate where climate and sustainability risks are embedded in budgets, capex, and strategy.”
    – Helle Bank Jorgensen

7. Are We Discussing Climate in the Right Way?

Some climate discussions quickly turn toward politics or scientific debates. That’s rarely productive for any board. Discussions are most effective when they deal with organizational impacts, strategic implications, and board oversight responsibilities. Focus on governance questions like these:

• What climate-related risks or opportunities are most material to our organization over the next 3–5 years?
• How could climate-related disruptions affect our operations, stakeholders, or strategic objectives?
• How might our strategy or business model be vulnerable to changing environmental, regulatory, or stakeholder conditions?
• How prepared are we for climate-related events?

The Board Chair’s Role

CLIMATE GOVERNANCE
Keeping climate discussions strategic
Focus attention on risk, resilience, opportunity, and long-term performance.

 Board chairs play an important role in determining whether climate-related discussions add value or create confusion. An effective chair can help by:

• Placing the Topic on the Agenda. Climate issues deserve attention when they could materially affect the organization. The chair ensures those discussions occur.
• Connecting Climate to Oversight Responsibilities. The best discussions connect climate issues to strategy, risk, capital investment, and business continuity.
• Encouraging Diverse Perspectives, Climate discussions benefit from different viewpoints and experiences. Strong chairs encourage broad participation and thoughtful questioning.
• Staying Focused on Governance. The chair helps steer the conversation away from technical rabbit holes and scientific debates.

Boardroom Mistakes

Even well-intentioned boards struggle to deal with climate oversight, either dismissing it entirely or treating it as disconnected from other governance responsibilities. Here are five common mistakes:

1.  Assuming Climate Change Only Matters to Big Companies. Many smaller organizations face significant climate-related risks and opportunities.
2.  Treating Climate as Someone Else's Responsibility. Oversight of material risks belongs in the boardroom.
3.  Focusing Only on Compliance. Regulatory reporting requirements matter, but good governance goes beyond disclosure.
4.  Looking Only for Risks. Opportunities deserve attention too.
5.  Waiting Until a Disruption Happens. By the time a climate event occurs, many options may no longer be available.

The best time to discuss resilience is before your organization needs it.

The Savvy Director Mindset

Climate change isn’t a stand-alone board issue. It’s another lens through which you can oversee strategy, risk, organizational resilience, and long-term sustainability.

Climate-related oversight is ultimately about helping the organization remain adaptable and prepared in a changing environment. As a director, you don’t need to predict every disruption or master every technical detail. Your responsibility is to ensure the organization is thinking ahead, assessing material impacts, and preparing thoughtfully.

The board's role isn’t to predict the future. It’s to help the organization prepare for it.

Your Takeaways

• Climate change is a governance issue affecting strategy, risk, operations, and resilience.
• Climate oversight applies to organizations of all types.
• To understand the potential impact of climate change on your organization, start by asking thoughtful questions.
• Consider both risks and opportunities.
• If you’re the board chair, keep climate discussions strategic and focused on governance.

Resources

• Asking Better Questions on Nature: A guide for Canadian Board Directors. Canada Climate Law Initiative. July 2026.
• How Climate Change is Reshaping Nonprofit Work in Canada. Academy for Sustainable Innovation. July 2026.
• Climate risk is becoming a core business continuity issue. IoD Content Team. Institute of Directors New Zealand. June 2026.
• Every Nonprofit Is a Climate Organization Now, Whether It Recognizes It or Not. Zane McNeill. NonProfit Quarterly. May 2026.
• New climate realities in the boardroom: What directors are really saying (and doing). Helle Bank Jorgensen. Board Intelligence. February 2026.
• Board Leadership for Growth and Resilience: Guiding Principles for Climate and Nature Governance. Chapter Zero Alliance. January 2026.
• The board’s role in climate change governance. Dan Byrne. © 2026 Corporate Governance Institute.

Thank you.

Scott

Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online membership with practical tools and valuable insights designed for directors at every stage – from first appointment to board leader.

We Value Your Feedback: Share your suggestions for future Savvy Director topics.