--- title: Align the board with climate goals date: 2024-02-14T08:09:00Z modified: 2026-04-01T09:34:18Z permalink: "https://chancerylaneproject.org/guides/align-the-board-with-climate-goals/" type: guide status: publish excerpt: Enable good climate governance from the top down wpid: 11095 climate-or-nature-outcome: - Climate risk - Decarbonisation climate-solution: - Align corporate strategy with climate transition plan - Incentivise and enforce decarbonisation - Promoting just transition - Reducing GHG emissions contract-lifecycle-stage: - Business decision and strategy application: - Universal application law-or-regulation: - Paris Agreement legal-concept-activity: - Board governance / decision-making - Corporate strategy - Directors duties - Employee performance conditions - Executive remuneration practice-area: - Corporate - Mergers and acquisitions primary-user: - Corporate lawyers - Directors/C-suite standard-or-framework: - Race to Zero - Science-based Targets Initiative (SBTI) tclp-principle: - Good climate governance use-case: - Articles of Association - Company policies - Employment contract - Governance documents featured_image: "https://chancerylaneproject.org/wp-content/uploads/2024/04/Align-the-board-with-climate-goals-nd-report-on-emissions.png" --- ## This guide enables companies to: - align their corporate strategy and [transition plan](https://chancerylaneproject.org/glossary/transition-plan/) - incentivise board members to achieve the company’s emissions-reduction targets - mitigate reputational and liability risks, such as in respect of [greenwashing](https://chancerylaneproject.org/glossary/greenwashing/) and climate-related litigation - demonstrate climate leadership and commitment to reducing [greenhouse gas emissions](https://chancerylaneproject.org/glossary/greenhouse-gas-emissions/). [ Download this guide as a DOCx file ](#)## Align directors’ duties with climate targets Companies are increasingly required to consider climate change as part of their corporate governance. To align directors’ duties with climate targets, consider whether to integrate climate considerations into core governance documentation by updating company policies and articles of association. Directors should be held accountable for reducing the company’s emissions and achieving other climate goals. This incentivises directors to align the business with [Paris Agreement goals](https://chancerylaneproject.org/glossary/paris-agreement-goals/), especially if they risk personal liability for failing to comply. #### Example wording \[Subject to OR In accordance with\] the articles of association, the directors are responsible for the management of \[the Company\]’s business, for which purpose they may exercise all the powers of \[the Company\]. The directors shall manage \[the Company\] in a manner that achieves all of the following: - reduces or eliminates its [scope 1, 2 and 3](https://chancerylaneproject.org/glossary/scope-1-2-and-3-emissions-and-total-emissions/) [greenhouse gas emissions](https://chancerylaneproject.org/glossary/greenhouse-gas-emissions/) - meets emissions-reduction targets that comply with international standards (for example, [Science Based Target initiative net zero standard](https://files.sciencebasedtargets.org/production/files/Net-Zero-Standard.pdf)) promotes a [just transition](https://chancerylaneproject.org/glossary/just-transition/) to a fair, equitable and low-carbon economy. The directors shall do all of the following: - make judgments regarding climate risk that are based on a reasonable consensus of scientific opinion - accord appropriate weight to climate risk - implement reasonable measures to mitigate the risks to the long-term financial profitability and resilience of \[the Company\] in the transition to a low-carbon economy aligned with the global temperature objective of 1.5C under the Paris Agreement - adopt strategies which are reasonably likely to meet \[the Company\]’s agreed ESG targets and targets to mitigate climate risk - ensure that the strategies adopted to manage climate risk are reasonably in the control of both existing and future directors. ## **Establish a board committee for sustainability** See [Allocate responsibility for delivery of the transition plan](https://chancerylaneproject.org/guides/deliver-a-climate-transition-plan/#h-allocate-responsibility-for-delivery-of-the-transition-plan) section of our Deliver a climate transition plan guide. The members of this committee should be different to those on the remuneration committee. ## Link executive remuneration to achieving climate goals Directors should be rewarded for achieving climate goals and emissions-reduction targets as well as being held accountable if they fail to do so. Remuneration policies and practices should be designed to support the company’s strategy and executive remuneration should be clearly linked to the successful delivery of the company’s long-term strategy. #### Example wording **Key principles of the remuneration policy for executive directors** The executive directors’ compensation package should promote the long-term, sustainable success of \[the Company\], with a focus on its environmental, social and governance (ESG) targets. The ESG targets are set on an annual basis and are aligned with our externally communicated ambitions and commitments. Where performance is below the agreed ambition and commitments, the remuneration committee will use its discretion to assess vesting based on performance against the stated ambition and any other relevant information. The remuneration committee will determine the actual weighting of an award prior to grant. The remuneration committee seeks guidance each year from the sustainability committee when assessing and reviewing performance ESG targets. The remuneration committee has taken a holistic view of \[the Company\]’s performance in critical areas, including any matters outside the targets which the sustainability committee considers relevant. The \[relevant incentive arrangement\] is subject to the following performance conditions: **Financial performance condition** \[●\] **ESG performance condition** \[●\] percent of the \[relevant incentive arrangement\] is subject to \[the Company\] achieving the ESG Performance Condition. The remuneration committee will assess the ESG performance condition based on \[the Company\] meeting the following criteria by \[date\]: | **Criteria** | **Weighting** | | --- | --- | | Environmental targets | \[●\] percent | | Social targets | \[●\] percent | | Governance targets | \[●\] percent | #### Remuneration report **Environmental targets** Subject to shareholder approval of the proposed \[year\] policy, the targets for the \[relevant incentive arrangement\] will be reviewed annually by the committee and those agreed for \[year\] are: - within \[time period\], setting emissions-reduction targets validated by the Science Based Targets initiative and signing up to [Race to Zero](https://www.climatechampions.net/campaigns/race-to-zero/) - meeting its public commitment to reduce [scope 1, 2 \[and 3\] emissions](https://chancerylaneproject.org/glossary/scope-1-2-and-3-emissions-and-total-emissions/) by \[●\] percent by \[year\] - achieving \[●\] of the interim targets set out in its [transition plan](https://chancerylaneproject.org/glossary/transition-plan/) - assessing and verifying \[the Company\]’s [carbon footprint](https://chancerylaneproject.org/glossary/carbon-footprint/) in accordance with \[one of the recognised carbon footprint standards\] - purchasing electricity for its offices \[and other premises\] on a green tariff that uses 100 percent renewable energy - making investment decisions for carbon capture, utilisation and storage projects \[_insert other specific type of relevant low-carbon fuel technology, if relevant_\] - using web hosts and cloud service providers that run their servers on 100 percent renewable energy or have their own net zero target - establishing and implementing a training programme for all employees on the actions taken by \[the Company\] to achieve its net zero target, the need for the transition to [net zero](https://chancerylaneproject.org/glossary/net-zero/) to be a [just transition](https://chancerylaneproject.org/glossary/just-transition/) and, in particular, how employees can help to reduce \[the Company\]’s scope 3 emissions - donating \[●\] percent of its net profits to entities who aim to mitigate the impact of climate change - using contract clauses to align \[the Company\]’s activities and relationships, including its supply chain contracts, with its emissions-reduction targets and providing support required by its contract partners to assist them in fulfilling those obligations. \[Include an analysis of \[the Company\]’s performance against each target and an analysis of trends or changes in the entity’s performance.\] **Personal and strategic objectives for the \[job title\] in \[year\]** \[Objectives could include: to ensure carbon data methodology and data collection process is robust enough to anchor our ESG roadmap; to address performance issues and capability requirements to drive forward our ESG agenda; to complete energy audits, together with action plans for achieving reductions by the end of \[year\].\] | **Category** | **Objective(s) set** | **Met?** | **Commentary** | | --- | --- | --- | --- | | ESG | \[_insert objectives relevant to the Company_\] | \[the remuneration report should report on progress against these objectives\] | | #### **Updates** **December 2025** This guide was updated following a quality assurance review. ## Related guides Guide #### [ Factor climate considerations into board decisions ](https://chancerylaneproject.org/guides/factor-climate-considerations-into-board-decisions/) Ensure the board makes decisions that support rather than undermine its transition plan ![](https://chancerylaneproject.org/wp-content/uploads/2024/04/Factor-climate-considerations-into-board-decisions-640x384.png) Guide #### [ Integrate climate obligations into contracts ](https://chancerylaneproject.org/guides/integrate-climate-obligations-into-contracts/) Impose legally binding and enforceable obligations to help meet emissions-reduction targets ![](https://chancerylaneproject.org/wp-content/uploads/2024/04/Integrate-climate-obligations-into-contracts-640x384.png) ## Climate clauses using the contractual solutions in this guide Lila’s Clause #### [ Board Paper Implementing Net Zero for SMEs ](https://chancerylaneproject.org/clauses/board-paper-implementing-net-zero-for-smes/) Jurisdiction: [England & Wales](https://chancerylaneproject.org/news/jurisdiction/england-wales/) Updated: 15 January 2025 Maintained Scarlett’s Performance Conditions #### [ Environmental, Social and Governance (ESG) Based Performance Conditions for Employee Incentive Awards ](https://chancerylaneproject.org/clauses/environmental-social-and-governance-esg-based-performance-conditions-for-employee-incentive-awards/) Jurisdiction: [England & Wales](https://chancerylaneproject.org/news/jurisdiction/england-wales/) Updated: 3 March 2025 Maintained Jedda’s Clause #### [ Indigenous/ Local Knowledge in Board Director Appointments ](https://chancerylaneproject.org/clauses/indigenous-local-knowledge-in-board-director-appointments/) Jurisdiction: [England & Wales](https://chancerylaneproject.org/news/jurisdiction/england-wales/) Updated: 2 November 2022 Not maintained Elliot’s Handbook #### [ Net Zero Culture Employment Handbook ](https://chancerylaneproject.org/clauses/net-zero-culture-employment-handbook/) Jurisdiction: [England & Wales](https://chancerylaneproject.org/news/jurisdiction/england-wales/) Updated: 27 September 2021 Not maintained ## Glossary definitions used in this guide Glossary term #### [ Carbon Footprint ](https://chancerylaneproject.org/glossary/carbon-footprint/) Updated: 8 July 2025 Definitions: 5 Glossary term #### [ Greenhouse Gas Emissions ](https://chancerylaneproject.org/glossary/greenhouse-gas-emissions/) Updated: 8 July 2025 Definitions: 3 Glossary term #### [ Just Transition ](https://chancerylaneproject.org/glossary/just-transition/) Updated: 14 August 2025 Definitions: 4 Glossary term #### [ Net Zero ](https://chancerylaneproject.org/glossary/net-zero/) Updated: 11 August 2025 Definitions: 3 Glossary term #### [ Paris Agreement Goals ](https://chancerylaneproject.org/glossary/paris-agreement-goals/) Updated: 19 June 2025 Definitions: 1 Glossary term #### [ Scope 1, 2 and 3 Emissions and Total Emissions ](https://chancerylaneproject.org/glossary/scope-1-2-and-3-emissions-and-total-emissions/) Updated: 18 September 2025 Definitions: 3 Glossary term #### [ Transition Plan ](https://chancerylaneproject.org/glossary/transition-plan/) Updated: 18 September 2025 Definitions: 1 ## Topics **Climate or nature outcomes:** [Climate risk](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/climate-or-nature-outcome/climate-risk.md), [Decarbonisation](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/climate-or-nature-outcome/decarbonisation.md) **Climate solutions:** [Align corporate strategy with climate transition plan](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/climate-solution/align-corporate-strategy-with-climate-transition-plan.md), [Incentivise and enforce decarbonisation](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/climate-solution/incentivise-and-enforce-decarbonisation.md), [Promoting just transition](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/climate-solution/promoting-just-transition.md), [Reducing GHG emissions](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/climate-solution/reducing-ghg-emissions.md) **Contract lifecycle management stages:** [Business decision and strategy](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/contract-lifecycle-stage/business-decision-and-strategy.md) **Guide Applications:** [Universal application](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/application/universal-application.md) **Law or regulations:** [Paris Agreement](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/law-or-regulation/paris-agreement.md) **Legal concept, activity or principles:** [Board governance / decision-making](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/legal-concept-activity/board-governance-decision-making.md), [Corporate strategy](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/legal-concept-activity/corporate-strategy.md), [Directors duties](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/legal-concept-activity/directors-duties.md), [Employee performance conditions](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/legal-concept-activity/employee-performance-conditions.md), [Executive remuneration](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/legal-concept-activity/executive-remuneration.md) **Practice Areas:** [Corporate](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/practice-area/corporate.md), [Mergers and acquisitions](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/practice-area/mergers-and-acquisitions.md) **Primary users:** [Corporate lawyers](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/primary-user/corporate-lawyers.md), [Directors/C-suite](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/primary-user/directors-c-suite.md) **Standard or frameworks:** [Race to Zero](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/standard-or-framework/race-to-zero.md), [Science-based Targets Initiative (SBTI)](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/standard-or-framework/science-based-targets-initiative-sbti.md) **TCLP principles:** [Good climate governance](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/tclp-principle/good-climate-governance.md) **Use cases:** [Articles of Association](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/use-case/articles-of-association.md), [Company policies](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/use-case/company-policies.md), [Employment contract](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/use-case/employment-contract.md), [Governance documents](https://chancerylaneproject.org/wp-content/uploads/wp-mfa-exports/taxonomy/use-case/governance-documents.md)