What does climate risk governance encompass?

The concept of climate risk governance primarily concerns the oversight and management of climate-related risks and opportunities within an organization. It involves the establishment of frameworks, policies, and practices that organizations implement to identify, assess, and mitigate risks associated with climate change. This includes ensuring that climate-related considerations are integrated into strategic decision-making processes, risk management frameworks, and overall corporate governance.

Effective climate risk governance also necessitates the engagement of stakeholders, transparency in reporting climate risks, and accountability mechanisms that ensure organizations are prepared for both the physical impacts of climate change and the transition to a more sustainable economy. By focusing on institutional practices, this governance aims to enhance resilience against climate risks while identifying potential strategic opportunities that climate change might present.

In contrast, global policies affecting climate change, local community initiatives, and investment strategies in fossil fuels represent different dimensions of climate action and response but do not specifically capture the internal governance aspect that encompasses an organization's approach to managing its climate-related risks and opportunities.