Breaking new ground on directors’ climate liabilities

Lawyers, academics, accountants, actuaries and other financial leaders have gathered in Oxford to discuss the potential liability of company directors for climate risks.

At Lady Margaret Hall, an Oxford college, international experts including ClientEarth lawyers explored company directors’ legal responsibilities – and potential liability exposure – in failing to manage the economic risks and opportunities associated with climate change.

The conference, held last week, was the first in a series organised by the Commonwealth Climate and Law Initiative (CCLI), formed by the University of Oxford’s Smith School of Enterprise and the Environment, HRH The Prince of Wales’s Accounting for Sustainability Project, and ClientEarth.

It is a clear sign that the concept of climate change as a material financial risk is finally becoming understood in many corners of the financial sector. Discussions covered topics from directors’ liability for stranded assets to directors & officers (D&O) insurance and attendees included representatives from universities to credit rating agencies.

Sophie Marjanac, ClientEarth Company and Financial Lawyer, who attended the event, said:

“In a post-Paris Agreement context, expectations are changing. Company directors failing to address the looming risks posed by a changing climate are more likely to be considered imprudent. These risks stretch all the way from the supply chain, to attracting investors and talent, and could have implications on the company’s bottom line – and in the courtroom.”

Leader of ClientEarth’s Company and Financial project Alice Garton, who spoke at the event, said:

“Rapid progress understanding and employing the law surrounding climate change and finance relies on cross-sector collaborations like this. It was a hugely productive day and there is a collective impetus to make this a regular occurrence.”

This gathering was designed to be the first of several: a dedicated space where leading experts can share ideas on how companies and investors must plan and respond to a changing climate – and help companies better understand what the law demands from them in doing so.

Topic areas explored included:

  • Corporate reporting on climate risk
  • Pension funds and portfolio management
  • Directors’ duties
  • Climate risk and the insurance industry
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