Climate and health: boards, committees and the strategic discussion

In Fidelio’s board assignments to date we have found boards with an explicit health mandate to think in the most interconnected way about climate and health. This includes, for example, building an understanding of how diseases that have long been endemic in warmer zones are spreading to more temperate climates with the corresponding impacts on populations and healthcare providers.

We are now, however, also seeing signs that the compartmentalisation between health and climate is breaking down. This is driven principally by the physical impact that extreme climate patterns are having across multiple businesses with heatwaves, fires and flooding all disrupting supply chains and production and, most importantly, also presenting a very real danger to employee and contractor safety.

For the majority of boards, committees will have a key role to play in ensuring that the board is apprised of the challenge that climate instability represents to employee safety and wellbeing, so that the company can be agile in its response. Given the multifaceted nature of the climate challenge, there are various committee touch points.

The audit and risk committee (ARC) is well placed to develop a risk framework to interrogate the risks that climate presents to the business, including the safety of employees. ARC will typically also oversee the adoption of policies which underpin climate resilience.

Arguably the key lens for considering the risks that climate presents to employee health and wellbeing is health and safety which often sits with sustainability, ESG, or people and culture at a committee level.

In well-run engineering, manufacturing or extractives companies, health and safety will be a board agenda item and many boards begin their discussion with a health and safety update. Failure to mitigate climate risks to health in the business will be reflected in remuneration with the remuneration committee being crystal clear that accidents and mortalities have a direct impact on bonuses.

What about the strategic discussion?

The strategic discussion of the interplay between climate and health belongs at board level. Increasingly, for example, climate-health impacts are extending to head office. It’s true that office employees frequently benefit from air conditioning, but this may not have extended to the commute. Moreover, rail, road and flights are all experiencing disruption from weather extremes.

Companies need to be alert to extreme weather and its impact on employee health. The company has a duty of care to employees, and the board will want to see resilience being built into working practices as well as infrastructure. A forward-looking board will be considering how climate is evolving and the impacts this may have on operations and employees. Nor will the consideration be limited to direct employees, as it is contractors that are too often in harm’s way.

Extreme heat results in a significant increase in hospital admissions. Working age adults are not the primary risk group but can also suffer from heat-related impacts and, of course, employees may also bear the responsibility of caring for family members who have been affected by the heat.

There is another dimension which warrants board attention in the context of climate and health. Mental health can also undoubtedly be affected by climate in myriad ways. This includes anxiety about climate on a personal and societal level. With the drip-feed of social media and the polarisation of public opinion on climate issues, including regarding the veracity of climate change, boards do well to understand the sentiment and mood within the company. As climate instability and uncertainty increases, an effective board will consistently be considering resilience which, in turn, will serve to underpin trust and confidence of employees.

Arguably, the primary challenge for boards is navigating increasingly interconnected risks. The interplay of climate and health is sadly becoming one of the best examples and therefore needs to be on the board agenda.