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Primer on Climate Change: Directors’ Duties and Disclosure Obligations

In collaboration with the Climate Governance Initiative, the Commonwealth Climate and Law Initiative (CCLI) has produced a primer on directors’ duties and climate change, covering 20 jurisdictions plus the European Union.

The evolution of our understanding of climate change from an ethical or environmental issue to one that presents foreseeable financial and systemic risks (and opportunities) over short, medium and long-term investment horizons has significantly changed its relevance to the governance of both corporations and investors. This evolution means there are serious implications for the duties of directors and officers, and potential disclosure obligations for companies.

This Primer provides an overview of contemporary evidence that climate change presents foreseeable, and in many cases material, financial and systemic risks that affect corporations and their investors. It then discusses: (1) general climate obligations in the jurisdictions where The Climate Governance Initiative is present though its global network of national Chapters; (2) how company law and directors’ duties in these jurisdictions require directors to incorporate climate change into their strategies, legal oversight, and supervision of the companies entrusted to their care; (3) disclosure obligations; and (4) advice to directors.