Helping companies achieve their sustainable energy objectives

Energy strategy governance

A strong governance framework for your integrated energy strategy should be incorporated into your management structure, in alignment with and as part of the overall governance of your company. It will help to ensure that accountabilities and responsibilities are understood and honored throughout the company, and will support decision-making and progress towards your vision.

What you should be aiming for:

  • A strong governance at board-level for energy and climate-related risks and opportunities;
  • Executive management commitment for the vision of the integrated energy strategy and cross-functional accountability with responsibilities defined for each function;
  • Carbon and energy impact assessment in business planning and procedures, using mechanisms like carbon pricing.

Governance for energy and climate-related risks and opportunities

Overseeing a company’s response to energy and climate-related risks and opportunities is a board responsibility. This means that adoption and overseeing of an integrated energy strategy is typically a strategic decision made by the company’s executive management. When designing your company’s governance for the integrated energy strategy, it’s important to consider the following:

  • How and when the board is informed about the integrated energy strategy;
  • Whether the board considers energy and climate-related issues when reviewing and guiding strategy, risk, budgets, performance objectives, capital expenditures, acquisitions or divestitures;
  • How the board monitors progress against targets for addressing energy and climate-related issues and the integrated energy strategy;
  • How the perspectives of upstream and downstream stakeholders will be communicated to the board;
  • Whether the company has assigned energy and climate-related responsibilities to management-level positions or committees, and whether such management positions or committees report to the board;
  • How the board and management are incentivized to successfully manage energy and climate-related issues and the success of the integrated energy strategy.

Cross-functional accountability for the integrated energy strategy

Accountability for the integrated energy strategy should not sit with one function. Many functions in the company have shared responsibility for energy and carbon management, both in terms of the actions they take and the decisions they make.

A framework that defines roles, responsibilities and activities across the company is a good place to start. It must reflect the way people work and support strategy implementation, making it easier to hold people to account.

Changing the culture and mindset of colleagues across your company is likely to be one of the biggest challenges you’ll face in developing and implementing the integrated energy strategy. Governance plays an important role in establishing structures, principles, practices and processes for behaviors within the company. In particular, leadership from senior management and their tone will be key to stimulating this change.


Board and executive management team

Typical roles and responsibilities

  • Hold company management accountable for delivering the integrated energy strategy
  • Oversight of energy and climate-related risks and opportunities
  • Provide visible leadership and endorsement of the strategy
  • Allocate budget and resources to ensure implementation is successful
  • Periodic review of strategy implementation and impact
Strategic sourcing/procurement

Typical roles and responsibilities

  • Adopt life-cycle costing of major energy using equipment, including a cost of carbon
  • Incorporate energy and carbon criteria in supplier evaluation
  • Incorporate energy and carbon performance targets in supplier contracts
  • Work with suppliers to drive low-carbon energy innovation, encouraging the use of efficient and low-carbon options wherever possible
Energy, environment and sustainability

Typical roles and responsibilities

  • Advise and guide the integrated energy strategy, energy targets and energy policies
  • Align the integrated energy strategy with other sustainability commitments
  • Work cross-functionally to deliver the integrated energy strategy
  • Report on the performance of the integrated energy strategy

Typical roles and responsibilities

  • Work with individuals responsible for energy use in the company to develop accurate financial budgets for energy
  • Provide guidance and support on internal funding and external financing mechanisms
  • Support the use of life-cycle costing across the company
  • Provide financial data on energy use to guide decision-making
Asset management, facilities management, capital projects, IT and other major energy users

 Typical roles and responsibilities

  • Consider energy efficiency and GHG emissions in the design, build, operation and maintenance of buildings, facilities and other significant energy using equipment
  • Trial new technologies and solutions
  • Identify energy waste/by-products and find solutions to avoid or capture wasted energy. When delivering major projects, ensure that energy issues are understood and that low-carbon solutions are identified and appropriately considered.
Fleet management

 Typical roles and responsibilities

  • Source low-carbon and energy efficient vehicles, including trialing new vehicles
  • Encourage adoption of low-carbon travel options
  • Fuel efficient driver training

Impacts on business planning and procedures: Internal carbon pricing mechanisms

Internal carbon pricing helps to deliver GHG emissions savings in a cost-effective manner by prioritizing the most cost-effective measures and ensuring that all investment decisions consider the carbon impact. It means that climate risks and opportunities can be presented in a common language that is easily understood. It also enables carbon targets to be integrated into existing processes, such as project planning and reporting.

Internal carbon pricing involves setting an annually fixed cost for each carbon dioxide emitted. There are two different options:

Shadow carbon pricing: A theoretical internal cost of carbon applied in project planning processes to test the feasibility of investment decisions and to support business cases to shift investments to low-carbon options.

Internal carbon tax/fee: Requires actual transfer of funds within the company either by financing carbon credits, or by financing internal projects to reduce GHG emissions or for rewarding actions which lead to GHG emissions reductions. In some cases, an internal cost of carbon will appear within the company’s profit and loss statement, and individual business units have a set carbon budget.


  • Define the role of executive management in assessing and managing energy and climate-related risks and opportunities.
  • Use scenario analysis to understand the potential impact of energy and climate-related risks and opportunities on your company’s strategy and financial planning.
  • Set incentives for executive management to effectively manage energy consumption.
  • Make sure all stakeholders that have a high impact and influence on the integrated energy strategy understand their role and responsibilities.
  • Use an internal carbon price to inform business case development and decision-making.
  • Give adequate time, budget and resources to people with energy management responsibilities, so that they can fulfil those effectively.

  • Have you defined an effective governance structure for your strategy with clear roles and responsibilities?
  • Are policies and targets understood and endorsed by executive management?
  • Are there continuity plans in place so that accountabilities are handed over when individuals leave?
  • Does your strategy outline how success will be evaluated, with the necessary tools to make decisions in a changing environment?
  • Is your strategy flexible and adaptable to ensure it remains relevant, impactful and effective when changes occur in your company?
  • Have you integrated energy and climate-related risks and opportunities into an annual assessment process or long-term planning?
  • Are significant deviations from the strategy investigated and responded to?

Copyright © 2024
World Business Council for Sustainable Development

All rights reserved | Privacy Policy


Avenue du Bouchet 2bis,
1209 Geneva,

Tel: +41 (22) 839 3100

How to find us

Share This