A guide to help Canadian corporate boards and their audit committees respond to investor demand for climate governance was released Tuesday by the Canada Climate Law Initiative, a climate research organization.
The guide, "Audit Committees and Effective Climate Governance, A Guide for Boards of Directors," aims at helping companies disclose climate-related financial risks and opportunities demanded by investors and Canadian securities regulators. It includes current legal standards and best practice guidance to help Canadian corporate audit committees take a leadership role in effective climate governance, according to a news release.
The organization noted in the release that in November, CEOs of Canada's largest pension plans with a collective $1.6 trillion in assets committed to integrating climate-related and other environmental, social and governance factors into their investment decisions, and reminded the companies they invest in of their obligation to disclose their material business risks and opportunities in a useful format. "This guide will assist corporate boards and their audit committee to provide that information," CCLI said in the release.
External auditors are increasingly integrating climate issues into external audits, the organization noted in the release. "It is only a matter of time before they will raise climate issues as a 'key audit matter' for some entities, so the audit committee must be prepared," it said, noting that Canadian courts have also called climate risk "an existential threat to human civilization and the global ecosystem."