The objective of climate-related financial disclosures on governance is to enable users of general-purpose financial reports to understand the governance processes, controls and procedures an entity uses to monitor, manage and oversee climate-related risks and opportunities. (IFRS S2, Paragraph 5) 

What is climate governance? 

Governance refers to the structures and processes that support strategic decision-making within an entity. Climate governance specifically focuses on how an entity identifies, assesses, and responds to climate-related risks and opportunities.  

Under IFRS S2, entities are required to disclose their climate governance arrangements. These disclosure requirements can be grouped into three key areas: 

Getting started with climate governance 

As climate change becomes a significant business risk, driven by extreme weather events and rapidly evolving regulatory expectations, boards and management teams must be agile, informed and forward-thinking. This agility is supported by continuous learning and entity-wide collaboration.

At the heart of climate governance lies a critical question: How well are climate issues integrated into the entity’s core strategy and operations? 

To establish strong climate governance, entities can consider:

1. Appointing leadership: Establish a dedicated ESG Committee or appoint an individual (e.g., Chief Sustainability Officer) to oversee climate-related matters.
2. Building capacity: Strengthen the competencies of key personnel (e.g., board members, management, committee members) through targeted training. For example, several clients shared that their board directors participated in SGX Group’s sustainability training, which covers climate reporting fundamentals and GHG emissions. We also conducted ESG workshops for clients, tailored to the practical application of the IFRS Sustainability Disclosure Standards.
3. Coordinating discussions: Ensure regular board-level engagement on climate issues, supported by structured updates from management. One client, for instance, established a cross-regional sustainability working team responsible for data collection, report preparation supports and periodic updates to the board.
4. Developing systems: Create internal policies and procedures to identify and manage climate-related risks and opportunities.  These processes can be integrated into existing risk management and performance tracking systems. 

Why effective climate governance matters? 

A well-established climate governance framework helps an entity to: 

Next steps for reporting

When preparing your sustainability report, consider using an organisational chart to illustrate the governance hierarchy for climate-related opportunities, accompanied with a clear narrative outlining the responsibilities of each committee or key individual. Formalising governance processes and documenting them will strengthen internal oversight and enhance stakeholder credibility.

For further guidance, refer to the “Governance” section of IFRS S2.