Climate Risk: Why boards must wake up

By Richard Ndebele

Once seen as an external concern best left to environmentalists and policymakers, climate change has now moved into the financial core of business decision-making. Today, the question Zimbabwean boardrooms must ask isn’t “Is this a sustainability issue?” but rather, “What is the financial cost of doing nothing?”

Climate risk has become a financial risk—one that manifests not just in insurance premiums or ESG ratings, but in stranded assets, disrupted operations, rising input costs, and regulatory penalties.

Boards that fail to integrate this risk into strategic planning are not just uninformed—they are exposing their organisations to systemic vulnerability.

Climate Risk is reshaping the business landscape

From persistent droughts affecting agriculture yields to flooding that cripples infrastructure, Zimbabwe is already witnessing the physical impacts of climate change. These are not hypothetical risks. They are material events with balance sheet implications.

Take Cyclone Idai in 2019, which caused over US$3 billion in economic losses across Zimbabwe, Mozambique, and Malawi.

The storm devastated infrastructure, displaced thousands, and severely affected agriculture, food security, and logistics. Yet, few companies had incorporated such climate shocks into their enterprise risk frameworks.

Similarly, South African mining giants like Anglo American have faced severe production cuts and revenue losses due to water shortages driven by climate variability. For Zimbabwe’s mining and agriculture sectors—cornerstones of our economy—such risks are not distant probabilities. They are emerging realities.

It’s not about compliance. It’s about strategy.

Many organisations make the mistake of treating climate risk as a compliance burden, driven by reporting standards like IFRS S2 or donor-funded ESG checklists. But truly forward-thinking boards understand that this is about competitive advantage, risk mitigation, and long-term value.

Companies that align their business models with climate resilience are better placed to:

• Access sustainable financing and green investment capital
• Reduce regulatory risk and exposure to carbon pricing
• Win over climate-conscious customers and stakeholders
• Enhance brand trust and international competitiveness

The collapse of California utility PG&E in 2019, which filed for bankruptcy after climate-fuelled wildfires caused liabilities exceeding US$30 billion, serves as a stark warning. Climate risk can sink even the most established companies if left unmanaged.

The unsung heroes: Accountants as climate risk translators

At the centre of this transformation is a quiet but powerful revolution—the rise of the accountant as a climate navigator.

Gone are the days when accounting was purely retrospective. Today’s accountants must engage in carbon accounting, model scenario-based financial risks, and advise boards on climate-adjusted investment planning. Their tools now include climate disclosure frameworks, integrated reporting systems, and sustainability KPIs.

Specifically, Zimbabwean accountants must:

• Translate climate impacts into quantifiable financial risks (e.g., asset impairments, cost volatility, exposure to transition risk)
• Drive adoption of IFRS S1 and S2, aligning financial reporting with sustainability data
• Guide climate scenario planning for capital budgeting and investment decisions
• Track return on sustainability investments and ensure that ESG efforts create real value

In essence, accountants are becoming architects of climate-informed financial resilience. This shift must be embraced, not resisted.

Climate-literate boards: The next governance benchmark

For boards to truly respond, they must build climate literacy at the top. A board that does not understand climate risk is a board that cannot govern effectively in the 21st century. Climate competence should be part of board evaluations, director training, and governance charters.

Consider Kenya, where prolonged droughts have drastically impacted tea and coffee yields, slashing export earnings and triggering rural economic shocks. Zimbabwean agribusinesses face similar exposure and must integrate climate science into financial planning and board-level strategy.

Conclusion: The time for climate-ready governance is now

Zimbabwean boards must move beyond symbolic sustainability gestures. The real work lies in embedding climate risk into financial planning, enterprise risk management, and boardroom conversations. Climate change is not tomorrow’s threat—it is today’s reality.

Accountants will help quantify it. Boards must act on it. Because in today’s economy, ignoring climate risk is a decision that no board can afford to make.

Richard Ndebele FCG, RPAcc, MBA, is the Manager: Technical, Research and Quality Assurance at Chartered Governance and Accountancy Institute in Zimbabwe and the PAFA Sustainability Centre of Excellence’s Country Champion. He can be contacted on rndebele@cgizim.org