Corporates will have to step up on achieving decarbonisation goals

The adoption of measures remains low for Energy and Natural Resources (ENR) companies compared to other sectors. It is time for boards to steer the energy organisations in meeting the demands of climate change.”

“Boards have to set very clear directions to guide thought and action at every level. To ensure that the guidance is indeed being followed, boards need to find ways to maintain regular dialogue with peers and key stakeholders,” it said.
“Boards have to set very clear directions to guide thought and action at every level. To ensure that the guidance is indeed being followed, boards need to find ways to maintain regular dialogue with peers and key stakeholders,” it said. (Representative image)

Corporates will have to step up their efforts on achieving decarbonisation goals, as funding will be available for viable businesses that work on a high decarbonisation bar. Also, progressively, financing will become scarce for high carbon initiatives even if those are financially viable.

Highlighting the role of company boards in taking the net-zero carbon emission agenda forward, KPMG in its report ‘Decarbonisation and the evolving role of corporate boards’ said that the boards have to ensure that sustainability and climate aspects are brought into day-to-day operations by integrating sustainability and non-financial targets into the existing incentive structure.

The report observed that climate responses towards actionable goals have been slow. Governments, financing institutions, industry participants are coming together through alliances to collaborate and focus towards taking stronger actions, however, the pace of energy transition has been sluggish. Globally, investment dynamics in energy sector are changing, and companies need to be better prepared to balance their investments across technology portfolios

Anish De, global sector head (power and utilities), KPMG said, “Climate goals will keep ratcheting up and hence present goals and regulations needs to be altered to achieve decarbonisation goals. Boards carry the principal fiduciary responsibility for making that change to happen.”

The adoption of measures remains low for Energy and Natural Resources (ENR) companies compared to other sectors. It is time for boards to steer the energy organisations in meeting the demands of climate change.”

Organisations need to do more than what the regulation demands and move beyond compliance, the report findings suggest.

“Boards have to set very clear directions to guide thought and action at every level. To ensure that the guidance is indeed being followed, boards need to find ways to maintain regular dialogue with peers and key stakeholders,” it said.

According to De, to achieve these targets, boards’ leadership will involve many dimensions like change in organisational culture and performance metrics, maintaining and enhancing climate competence within the board as well as within the organisation, translating commitments into material changes which move beyond tokenism, risk and opportunity assessment, disclosures and compliance and investment planning and technology selection.

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