Explained byBCG

Start to implement governance for sustainability

How to put governance mechanisms in place to begin your climate journey

To successfully embark and progress on your journey to achieve your Net Zero ambition, it is essential to establish effective and well-structured governance processes and mechanisms.

Your climate ambition, informed by stakeholder needs, regulatory requirements, and business opportunities, provides a foundation for you to eventually develop a climate strategy (for more information, see Chapter 4: Reduce).

Your central core of sustainability leaders and champions should take the crucial first steps in mobilizing stakeholders and identifying and executing on priority actions (e.g., measuring baseline, setting target, developing a net-zero strategy). You can also establish senior committees comprising groups of leaders to collectively consider and decide on courses of action.

It is also helpful to create clear high-level accountabilities and ownership of foundational building blocks toward your climate ambition. For example, you can nominate an Executive Committee business leader (e.g., head of region, general manager, etc.) to own the assessment of climate risks and opportunities at the outset, or a senior communications leader tasked with spreading the word internally. The CDP, a non-profit dedicated to encouraging corporate environmental reporting, recommends establishing board oversight of climate efforts, clear ownership/management positions and responsibilities, and employee incentives for climate action (1). A leader can also be nominated to roll out upskilling initiatives, as described earlier.

Additionally, you should set up monitoring and evaluation mechanisms to track progress and evaluate the effectiveness of your sustainability actions.

With these processes and governance mechanisms, your organization will be better equipped to take the first steps of mobilizing your workforce toward Net Zero, responding to stakeholder needs, seizing sustainability-related business opportunities, and complying with regulations. You should regularly track your progress along your sustainability journey.

It is important to keep in mind that, while a central team is often critical to catalyzing climate action, too often the central sustainability team is tasked with achieving the entirety of a company’s climate goals. This is not a successful long-term strategy. The task of transforming your company to become more sustainable needs to be shared widely from the very beginning by empowering the entire organization, including through monitoring and evaluation. After an initial period (e.g., 1-3 years), as targets are set and a decarbonization roadmap is developed, there will need to be a further, deeper definition of roles and responsibilities, as well as climate targets and initiatives developed at more granular levels that permeate the organization. This will be covered later, in Chapter 4: Reduce.