The Role of Leadership in Managing Climate Risk in Organizations
August 18th, 2025
Contributor: Sreelakshmi M P
Who should read this?
Climate risk is rapidly changing the way organizations operate and how they plan for the future. Extreme weather events, evolving regulations, and rising stakeholder expectations are forcing businesses to rethink their strategies. For many organizations, the ability to stay resilient now depends on how effectively they manage these risks.
At the center of this response lies leadership. It is leaders in organizations who shape the vision, set the tone, and make the strategic decisions that determine resilience. Encouragingly, recent research shows that 91% of business leaders have maintained or increased their investments in the net-zero transition, proving that climate risk is no longer just about commitments—it is about action and delivery. Their choices influence whether climate risk becomes a compliance exercise or an opportunity for long-term value creation.
Strong leadership ensures that climate risk management is embedded into strategy, governance, and culture. Ultimately, it is the vision of leaders that guides organizations through uncertainty and positions them to thrive in a changing world. This blog explores the key responsibilities of leaders in managing climate risk in organizations.
Key Responsibilities of Leaders in Managing Climate Risk in Organizations
1. Setting the Vision and Strategy
In organizations, leaders carry the responsibility of embedding climate considerations into the core business strategy rather than treating them as separate or secondary concerns. This means ensuring that goals like net-zero targets, energy transition, and adaptation plans are aligned with broader organizational objectives. By doing so, leaders help create a roadmap where sustainability is a driver of long-term success rather than a compliance requirement. A clear climate vision also provides direction for teams, helping them understand how their day-to-day decisions contribute to resilience. Leaders who prioritize climate issues at the strategic level signal to stakeholders that the organization is serious about future readiness. Ultimately, it is the leadership vision that defines whether climate risk becomes a burden or an opportunity for growth.
2. Establishing Governance and Accountability
Strong governance is the backbone of managing climate risk in organizations, and it starts with leadership. Leaders must establish formal governance structures that define how climate risks are identified, assessed, and managed across all levels of the business. This includes assigning clear accountability to executives and boards, ensuring responsibilities are not scattered or unclear. Embedding climate risk into enterprise risk management systems makes it part of standard business oversight, reducing the chance of it being overlooked. Transparent reporting and regular reviews hold the organization accountable, ensuring that progress is tracked and communicated. Without leadership-led governance, efforts remain fragmented, often failing to achieve meaningful impact or organizational change.
3. Allocating Resources and Building Capacity
In organizations, climate risk management cannot succeed without the right level of resources. Leaders must ensure that adequate funding, skilled personnel, and the right technological tools are dedicated to climate resilience initiatives. This could mean investing in renewable energy, upgrading facilities to withstand extreme weather, or equipping teams with advanced risk assessment tools. Beyond financial resources, building capacity through training is equally important, enabling employees to understand climate challenges and contribute to solutions. Leaders must also prioritize collaboration with external experts, consultants, or partners to fill internal capability gaps. By directing resources effectively, leaders make climate readiness achievable rather than aspirational.
4. Engaging Stakeholders
Climate risk is not an isolated issue—it impacts and involves a wide range of stakeholders. Leaders in organizations must take an active role in engaging employees, investors, regulators, and customers on climate-related initiatives. Clear and transparent communication about risks, goals, and progress builds trust and ensures credibility. Investors increasingly demand evidence of climate action, while customers and employees prefer to align with responsible organizations. Leaders who maintain open dialogue with regulators also ensure compliance and reduce exposure to reputational or financial penalties. By championing stakeholder engagement, leaders position their organizations as proactive, responsible, and forward-thinking.
5. Driving Culture and Change
In organizations, leadership sets the cultural tone for how climate risks are perceived and acted upon. Leaders who integrate sustainability into everyday decision-making foster a culture where climate risk is seen as everyone’s responsibility, not just the sustainability team’s. This requires modeling behavior from the top—when leaders prioritize climate issues, employees are more likely to do the same. Encouraging innovation, rewarding sustainable practices, and embedding climate thinking into performance metrics can accelerate cultural change. Over time, this creates resilience as climate awareness becomes part of the organizational DNA. Leaders who drive this cultural shift ensure that climate risk management is not only a strategic priority but also a shared value across the workforce.
Turning Vision into Action
Managing climate risk is not about future intentions but about decisions being made today. Leaders who act decisively position their organizations to stay competitive, credible, and resilient in the face of uncertainty. While many organizations are aware of the physical risks they face, research shows that only 19% have adopted concrete plans to mitigate them. This gap is exactly where leadership must step in—by turning awareness into structured strategies and measurable actions. Success will depend on moving beyond statements to tangible results that investors, employees, and customers can trust. The organizations that follow this path will not only withstand disruptions but also uncover new opportunities for innovation and growth. In the end, leadership is proven not by words, but by the outcomes it delivers.
