Heat waves, earthquakes, floods, droughts and disastrous sea levels are already occurring with disturbing frequency. These extreme weather events have become a major risk for business — and a mounting cause for concern among investors and other stakeholders of what lies ahead.

According to the United Nations Intergovernmental Panel on Climate Change’s August report, these events will only get worse — much worse — altering the global economy, disrupting business operations and supply chains and driving people from their homes. A competent board would be foolish to not be weighing the many potential impacts of climate change: how it will affect procurement, production and distribution, and how it will influence the actions of investors, business partners and customers.

For corporate boards, the focus is shifting from how a company’s activities impact climate to how climate will potentially impact the company’s own financial performance. The impetus comes from multiple sources but, perhaps most important, from the financial sector.

Andrew Steer, president and CEO of the Bezos Earth Fund, estimates that a quarter of financial institutions weigh environmental, social and governance issues in their decision-making. The blue-ribbon Task Force on Climate-related Financial Disclosures, set up by the Financial Stability Board in 2015 and spearheaded by former Bank of England governor Mark Carney and former New York mayor Michael Bloomberg, has become an influential voice for promoting more informed investment, credit and underwriting decisions, enabling a wide range of stakeholders to better understand the financial system’s exposure to climate-related risks.

In addition, companies can no longer ignore the growing involvement of regulators, especially in Europe, whether in the form of putting a price on carbon, setting progressively tighter standards for greenhouse gas emissions, or imposing tariffs on imported goods based on their carbon footprint.

Read the full article about climate competent board  by Helle Bank Jorgensen at GreenBiz.