Below are some of the key questions for boards of directors in the Canadian construction industry should consider in order to help their company meet market expectations and regulatory requirements. The questions aim to support directors in fulfilling their responsibilities of managing climate change impacts and the transition to net-zero emissions.

Directors should consider these questions in light of their company’s governance structure, operations, position within the construction value chain, and current level of integration of climate-related governance, strategies, risk management, targets, metrics, and disclosures. Directors should utilize these questions to move their company towards more effective climate governance.

Governance

• How should we integrate climate-related risks and opportunities into our board governance structure?
• Do we have the appropriate knowledge, skills, and expertise needed to be able to oversee a comprehensive identification, assessment, management, and communication of the climate-related risks and opportunities affecting our company? How do we upskill and maintain an appropriate level of knowledge, skills, and expertise about climate-related risks and opportunities affecting companies operating in our industry, market, sector, or region? How do we pass down the required knowledge, skills, and expertise about climate-related risks and opportunities throughout our company?
• While management and oversight of climate-related risks and opportunities are the responsibilities of all directors, do we need to allocate responsibility for its oversight and management across our existing board committees or establish a dedicated climate-related committee?
• Do we have a climate management plan? Are we able to communicate our climate management plan to our company’s managers, employees, investors, and clients?
• Who is responsible for the day-to-day management of climate-related risks and opportunities and the execution of our climate management plan within the company (e.g. legal, procurement, design, finance)? What does this allocation of responsibility say about how we, as a company, approach our climate-related risks and opportunities? Do the individuals or departments responsible for the day-to-day management of climate-related risks and opportunities and execution of our climate management plan have the necessary resources (e.g. authority, funding) to carry out their responsibilities effectively?
• Which individuals or departments need to come together to identify, assess, manage, and communicate climate-related risks and opportunities effectively?
• How are our climate-related policies and management plans operationalized within our company? Do our policies and management plans reach every manager or employee within our company?
• Is executive remuneration connected to our company’s performance towards climate-related risks and emission reduction targets? If yes, how? If no, why not?

Strategy

• How are climate-related risks and opportunities considered and integrated into our company’s strategic planning processes? How do our company’s strategic planning processes account for and leverage the construction value chain?
• How are our company’s clients and competitors, and other actors within the construction value chain factoring climate-related risks and opportunities into their own decision-making processes?
• How does our strategic plan align with the federal government’s target to reduce emissions by 40 per cent by 2030 and have a net-zero emissions and climate resilient buildings sector by 2050?
• How do we, as a company, ensure that management is considering all available, new, and emerging technologies, products, services, and incentives to reduce emissions, enhance climate resiliency, upskill our workforce, and deliver the products and services our clients want and need to address climate change, and the net-zero transition?
• How does our company view its role in the overall construction value chain regarding climate change and the net-zero transition? How can the company engage and communicate with other actors throughout the construction value chain to advance our climate management plan, emission reduction targets, net-zero transition, and climate resiliency strategies?
• Are we satisfied that our company has the correct leadership in place to lead our company in the strategic direction that we want to take in terms of climate change and the net-zero transition?

Risk management

• How does our company assess whether climate-related risks or opportunities have a material impact on our financial position, performance, and prospects? How do we, as a company, determine our risk appetite regarding climate-related risks and opportunities? What factors are considered to determine how short-, medium-, or long-term climate-related risks and opportunities are to be prioritized against our companies’ other priorities? How do our company’s existing risk assessment and management frameworks need to be adapted to better account for climate-related risks?
• What processes does our company have in place to ensure foreseeable and emerging climate-related risks are identified, assessed, confirmed, and communicated to directors in an accurate and timely manner?
• Does our climate-related risk assessment and management framework encompass the full scope of the potential impacts that climate-related risks and opportunities have on our company, communities, employees, investors, clients, and other actors along the construction value chain?
• Are our internal knowledge, skills, and capabilities sufficient to adequately identify, assess, and manage climate-related risks and opportunities? When and how do we retain and apply external expertise in our assessment and management of climate-related risks and opportunities?
• How have we assessed our risk exposure from our standard form contract clauses (i.e. force majeure, relief events, supervening events clauses) that may no longer offer protection regarding climate-related risks? How are we approaching contract negotiations with our clients and other actors across the construction value chain to address climate-related risks previously encompassed in our standard form contract clauses?
• What is our company’s management plan for mitigating disruptions to worksites from acute or chronic climate-related events?

Metrics and targets

• Have we set science-based emission reduction targets for our company?
• What resources have we directed to collect complete and accurate data required for setting science-based reduction targets for our company?
• How have we integrated our climate management plan and science-based emission reduction targets throughout our company and our construction projects? How does our company set appropriate metrics to assess its progress towards its emission reduction targets? What resources has our company allocated to accurately measure and report its progress towards its emission reduction targets?
• Should our company’s emission reduction targets, or ongoing measurement and reporting of progress towards our emission reduction targets, be subject to third party assurance?
• How is our company negotiating project requirements with other actors across the construction value chain to ensure terms of our supply and service agreements are aligned with our company’s emission reduction targets and climate management plan?