Capability in the climate era: Are boards ready for what’s next?

When directors from across New Zealand gathered, in person and online, for the annual IoD and Chapter Zero New Zealand Climate Forum earlier this year, the conversations were practical, candid and, at times, sobering.

Directors increasingly recognise climate change as a key strategic risk – one that demands their attention, not as a specialist add-on but as a mainstream governance responsibility. Yet many acknowledged that the pace and depth of board capability are not yet where they need to be.

A pulse survey at the forum, undertaken in partnership with Hobson Leavy, asked three straightforward questions about boards’ climate capability, leadership responsibility and strategic framing.

The results offer a clear snapshot of where boards stand today and how they compare internationally, as reported in the Global Network of Director Institutes’ (GNDI) 2025 Governing in the age of disruption: Climate change.

Board capability, responsibility and framing 

When forum respondents were asked whether their board includes climate or sustainability capability in its skills matrix, 49.4% said yes, 40.4% said no, and 10.1% said they were planning to. These directors were already engaged with climate governance and actively seeking to strengthen and deepen their knowledge, so it’s unsurprising that the results were somewhat more favourable than general benchmarks.

Even so, the data offers a constructive reference point. The finding positions New Zealand boards ahead of the global average, where only 28.9% of boards have directors with climate expertise, 31.5% report none, and 33.3% rely on external advisers. In both datasets, capability remains uneven, but the trend line is unmistakable: more boards are recognising that transition oversight is a core governance skill.

Responsibility for climate governance is still evolving. Over a third (35.6%) of participants said the full board leads on climate, but one in five (20.0%) reported no clear leadership. Others pointed to the CEO or management (15.6%), the board chair (12.2%), a committee chair (8.9%), or a designated climate champion (7.8%).

This dispersion mirrors the global picture: the GNDI report found that while most boards now receive regular climate updates, only a minority have defined governance structures or clear role accountability. Without clarity of ownership, it is easy for strategy to drift between management and board, and when that happens, climate oversight is less likely to be positioned clearly within strategy, opportunities can be missed and material risks may not be fully mitigated. Clear ownership keeps climate firmly within strategic and risk discussions, rather than a peripheral or reactive issue.

How boards frame climate issues also matters. Nearly half (47.1%) of forum respondents said their board’s approach is primarily about risk management, while 36.8% balance risk and opportunity, and 16.1% focus primarily on opportunity and value creation. The GNDI study shows a similar balance internationally, with directors more confident identifying physical and regulatory risks than translating transition scenarios into long-term growth or innovation opportunities.

Globally, only 17.6% of directors reported being completely confident their boards understand climate-related risks and opportunities, while 37.1% were fairly confident and the remainder acknowledged limited capability.

Building capability and confidence

This alignment suggests that both in New Zealand and abroad, capability rather than intent is a key limiting factor. Boards generally understand why climate matters; the challenge lies in knowing how to integrate it into mainstream decision-making amid competing short-term pressures.

Many are navigating rising costs, tighter margins and shifting policy settings, all while trying to maintain resilience and stakeholder confidence. In that environment, it can be difficult to prioritise long-term transition planning over immediate operational or financial demands, yet that’s precisely where governance capability makes the greatest difference.

That makes the next step clear: capability building is not a theoretical exercise but a practical enabler of better decision-making. Boards that can balance short-term imperatives with long-term transition strategy are more likely to safeguard both organisational value and their societal licence to operate.

Boards that feel under-equipped are less likely to test assumptions or challenge management on long-term investment decisions, and more likely to treat climate as a reporting or compliance issue. Conversely, when directors feel confident engaging with climate-related data and scenarios, they can link transition planning directly to performance, risk and opportunity.

Forum discussions emphasised the need to strengthen climate literacy alongside financial literacy so that all directors – not just one or two – can engage meaningfully on transition strategy, risk and capital allocation. In practice, that means equipping boards to ask sharper questions, evaluate trade-offs and ensure climate objectives are embedded in the organisation’s forward planning, not added after the fact.

Leveraging composition and development 

From a capability perspective, two levers stand out: composition and development. Composition ensures the right mix of skills around the table, while development lifts the baseline for everyone. Directors at the forum spoke of revisiting their skills matrices to ensure strategy, risk, supply chain, technology and finance discussions all explicitly consider climate implications.

Others highlighted the value of targeted education – sector-specific briefings, scenario workshops and peer learning through Chapter Zero New Zealand and the IoD’s programmes. Recent Hobson Leavy conversations with directors such as Bridget Coates CFInstD and Laurissa Cooney CMInstD have echoed this point: that board effectiveness increasingly depends on diverse capability and continuous learning, especially as the pace of transition accelerates.

Hobson Leavy’s experience in governance search highlights that the capability question is not necessarily solved by appointing a single climate director. Instead, it’s about ensuring every director can read, interpret and act on climate information as part of their fiduciary duty. Embedding that competence across the full boardroom is what builds institutional strength and confidence.

Accountability and sector insights 

Accountability is another lever. Forum presenters underscored that translating intent into action requires clear measures and incentives. Boards that connect climate objectives to risk frameworks, performance scorecards or executive remuneration help reinforce that transition is part of the core value agenda. The GNDI report supports this view, noting that climate capability and confidence increase when oversight is anchored in measurable outcomes and integrated into existing governance structures.

Sector context also matters. Directors at the forum pointed to the value of learning from peers tackling similar transitions whether in aviation, energy, property or waste management. Chapter Zero profiles such as Christchurch International Airport, Summerset Group, and Phoenix Recycling Group demonstrate that different sectors are finding distinct pathways to decarbonisation while maintaining financial performance.

For boards, these examples show what credible transition planning looks like: realistic milestones, transparent disclosure and continued alignment between climate ambition and business purpose. Phoenix’s experience highlights the value of structured emissions reduction programmes, clear board accountability and measurable outcomes, showing that climate governance can drive both environmental and commercial performance when embedded strategically.

The GNDI data confirms that New Zealand’s challenge is not unique. Across jurisdictions, capability gaps are widening between leaders and laggards. Only 23% of Australian boards include climate in their skills matrix, and just 9% of US directors describe themselves as climate or ESG experts, while 78% of US boards rate their expertise as novice to intermediate.

From awareness to action

Climate governance is time-intensive – even boards with relevant skills can find discussion squeezed by crowded agendas. Forum speakers emphasised that creating structured time to interrogate scenarios, test assumptions and track progress is key to embedding climate into core decision-making.

Climate deserves the same standing and structure on the agenda as audit or finance – regular, prioritised time for scrutiny and discussion. Establishing that structure creates the foundation for the deeper discipline of recurring review, clear criteria and continuous learning that turns awareness into performance. It also reinforces the connection between capability and capacity: having skilled people is not enough if the system does not give them space to use those skills.

Despite the challenges, the tone of the forum was hopeful. Directors described a clear shift from why to how, supported by a growing community of practice through Chapter Zero. Many boards are starting to see climate not only as a fiduciary responsibility but also as a source of long-term value shaping resilience, providing opportunities and access to capital.

The forum results show boards are engaged and realistic but not yet at full strength. The next step is familiar: lift baseline capability across the board, embed climate in strategy and investment, and maintain focus through consistent, measurable oversight.

Boards understand the why of climate governance. The task now is to build the capacity, confidence and competence to deliver on the how.

Hobson Levy Executive Search the official recruitment partner of Chapter Zero NZ.