Climate Governance

In brief: Once considered a long-term risk primarily affecting carbon-based energy companies, climate change has now become an urgent issue for a variety of industries experiencing disruption stemming from long-term changes in the earth’s climate. With regulators, investors, and other stakeholders watching this issue closely, boards are intensifying their oversight of this area.

This FAQ, informed by NACD’s work with the global Climate Governance Initiative, discusses how corporate directors can oversee and respond proactively to climate change risk. This memo offers guidance on climate change governance for corporations, including standards, metrics, and current board practices. The FAQ closes with a climate change glossary and an annotated list of climate change resources.

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.