Assigning responsibility for sustainability decision-making and oversight to the highest
governance body ensures strategic alignment and accountability at the top level. Additionally, having
dedicated sustainability functions, teams or committees can drive effective implementation of the
sustainability strategy across the organisation. Linking senior executives’ remuneration to
sustainability targets and having a supervisory board with relevant expertise incentivises leadership to
prioritise and achieve meaningful progress on the company’s most material sustainability issues.The companies are expected to prove that they have adequate climate change and low-carbon transition planning expertise represented at the highest governance body. There has to be at least two instances of expertise/competences related to climate change and the low-carbon transition represented among the members of the highest governance body. The instances are as follows:
- Academic qualification: An understanding of the impacts, risks and implementable solutions acquired via a bachelor’s, master’s or doctoral degree, professional certification, diploma, etc. A purely energy-related background with no relationship to climate change and the low GHG emissions transition is not enough to qualify as expertise.
- Professional experience: Previous employment with an organisation or in a role related to climate change or the low GHG emissions transition.
- Recent/active membership of relevant organisations: Positions in organisations driving corporate knowledge and action on climate change and the low GHG emissions transition. Examples include positions in bodies such as the World Business Council For Sustainable Development (WBCSD), or relevant industry associations for the sector the company operates in, such as the Solar Energy Industry Association (SEIA).
- Technical knowledge: Evidence of knowledge related to climate change and the low GHG emissions transition through recently published outputs written by the individual/committee, such as technical statements, industry reports, etc.The expertise does not all have to be held by one person; it can be distributed across different members of the board or highest governance body. The conditions for this element can also be met in instances where companies describe that the highest governance body has direct access to expertise, such as a specialised committee composed of external experts with a board member as the chairperson. In these cases, it must be specified what the scope of the committee is and how often it meets.Furthermore, the assessment also evaluates whether the highest governance body possesses expertise related to environmental (non-climate) or social impacts. As with the accepted types of expertise on the low-carbon transition, environmental and social expertise must fall within one of the four recognized categories of expertise.While the following list is non-exhaustive, the area of expertise should be relevant to the company’s material impacts:
- Environment: biodiversity, ecosystems (e.g., conversion or restoration), circularity, soil health, water, air, hazardous materials, waste, plastic, and invasive species.
- Social: Human rights. Indigenous people, economic development, labour rights/rights, gender, and nutritionGeneral references to expertise or environmental, social, and governance (ESG) competence are insufficient, as they may reflect familiarity with reporting rather than expertise on actual impacts. Furthermore, competency matrices disclosed by companies alone do not suffice. Claimed expertise must be supported by objective evidence, such as detailed biographies of board members, so that relevant experience can be clearly classified under one of the four aforementioned types of expertise.\*\*Attributes required: \*\*Types and frequency of low-carbon transition-related expertise or competencies among members of the highest governance body, as well as the presence of environmental and social impact expertise within the body.