Risks and resources: Questions that board directors should be asking about climate change

  • From a fundamental governance perspective, climate risk can threaten business models in the extractives sector and should be front and centre of board discussion.
  • Changes in laws may impact contracts, which in turn can influence the operational aspects of businesses in the extractives industries.
  • Individual directors need to demonstrate due diligence in relation to changes in the legal environment and be mindful of how this risk impacts their various board roles.

Good governance requires effective oversight of risks which is one of the roles of board directors and governance and risk committees of those boards1. Importantly, risks, whether emerging or long-standing, provide an opportunity for organisations to differentiate themselves from their competitors — if action is taken expeditiously to get in front of the changes that arise from them.  How businesses in the resources and extractives sector approach risk governance and management is crucial as it impacts upon supplier relationships through to how they are perceived in the market,2-4 and to relationships with customers and society more broadly.

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