Board Reflection and Management Oversight Questions

PRINCIPLE 2 Strategy Guiding questions for board reflection Question 1: How well does the board understand how climate and nature factors could impact or benefit the business, and in what ways are these considerations integrated into strategy? Question 2: What changes might we need to make to our business model or operations to stay competitive as climate and nature issues evolve? Question 3: How are our performance measures and management incentives driving the climate and nature actions we need to create value? Question 4: How can we effectively test if our strategy is compatible with likely changes to climate- and nature-related regulations? Question 5: What reliable ways do we use to keep abreast of climate and nature issues relevant to our business, and are we using this information to inform our decisions? Guiding questions for boards to ask of management Does management’s response include the following? Question 1: How are climate- and nature-related risks and opportunities built into our strategy, capital allocation and planning, and how often does the board review progress? –Climate and nature inputs embedded in strategic plans –Consideration in investment and capital allocation decisions –Risk and opportunity analysis linked to business planning cycles –Cross-functional engagement during planning processes –Regularly scheduled board review of progress against strategy and transition plans Question 2: How have we tested whether our business model is resilient against both transition risks (e.g. policy changes) and physical risks (e.g. extreme weather events), and what does this mean for our long-term viability in a low-carbon, nature-positive economy? –Scenario analysis or stress-testing against future transition pathways –Identification of key vulnerabilities and adaptation needs –Review of product, market and asset exposure –Reviews of policy and carbon-pricing trends –Board discussion of long-term business model viability Question 3: Do we have the necessary systems, processes and decision-making structures to support consistent and informed action across the organization? –Governance frameworks that support enterprise-wide alignment –Decision rights and escalation pathways clearly defined –Internal systems for tracking and reporting progress –Regular management updates to the board on implementation –Culture, KPIs and performance-based incentives aligned to long-term value creation Question 4: How do we compare to peers in our ambition, strategy and investment planning? –Benchmarking of targets, disclosures and investments –Peer analysis shared with leadership and the board –Identification of competitive risks or opportunities –Clear articulation of what differentiates the organization