The Adaptive Governance Imperative: How Corporate Boards are Responding to Climate Change Risk and Opportunity

Abstract

The escalating financial and operational risks posed by climate change necessitate a fundamental shift in corporate strategy and oversight. The effectiveness of a firm's response is increasingly dependent on the quality and adaptability of its corporate governance structure.

This study investigates the specific mechanisms through which corporate boards adapt to climate change, focusing on the impact of board climate expertise and the establishment of dedicated

We employ a quantitative, panel data analysis of 350 S&P 500 non-financial firms across high-emitting sectors from 2020 to 2024. Using a two-way fixed-effects regression model, we analyze the relationship between board characteristics (expertise, committee presence) and firm-level climate outcomes (TCFD disclosure score, carbon emissions intensity). A mediation analysis is conducted to test the Adaptive Governance Model (AGM).

 The Main results demonstrate that the presence of directors with verifiable climate expertise is positively and significantly associated with higher quality TCFD disclosure ($\beta = 18.45, p < 0.01$). Furthermore, the establishment of a dedicated climate committee is associated with superior climate performance, evidenced by a significant reduction in carbon emissions intensity ($\beta = -0.88, p < 0.05$). The mediation analysis confirms that these adaptive governance mechanisms partially channel the effect of external climate risk into internal firm outcomes.