November 16, 2021

Climate Change Oversight: Many Audit Committees Feel Unprepared

Results from a new Deloitte survey of 350 global audit committee members suggest that audit committees may not feel prepared to oversee the data collection and other changes that enhanced climate change disclosures and strategies may require. The survey also shows that at this point, there’s quite a bit of variation in the climate change responsibilities that audit committees are taking on. Some committee members feel that they lack a clear mandate to do what may be expected externally.

Here are some key stats (also see this Cooley blog):

– 62% of audit committee respondents in the Americas believe that climate change has no material impact on the organization

– When it comes to climate related matters, audit committees in the Americas are most likely to have oversight responsibility for risk management (63%), the front half of disclosure in the annual report, such as narrative climate risk and TCFD info (52%), the impact of climate risks & opportunities in financials, including in relation to judgments & estimates (54%), external audit’s work in climate-change related financial statement risks (53%) and assurance of climate-related info and disclosure (42%)

– 54% of audit committee respondents in the Americas said they don’t have the information, capabilities, or mandate to fulfill climate regulatory responsibilities or climate reduction targets

– The main internal challenges in overseeing climate change was the lack of clear strategy in relation to climate for the organization (65%), followed by poor quality of data (46%)

– Although 8% of audit committees in the Americas discuss climate change at every meeting, nearly 60% of global respondents said that their audit committees do not discuss climate change at all or as a fixed agenda item.

– 52% said that some or all of their audit committee members are “climate literate” – 48% said their committees were not “climate literate” or relied on just one committee member – nearly 90% seem to want more education versus different board members

– 18% of global respondents said that their climate impact assessment is reflected in the financial statements

– 42% of global respondents said that their organization’s climate response is not as swift and robust as they would like – 58% were satisfied

Liz Dunshee