Are directors courting legal action by keeping quiet on climate risk?
In Australia recently, shareholders filed legal action against Commonwealth Bank—it had allegedly failed to disclose climate risk accurately. Could this be the first of many such cases? How should directors report on climate change risks in the face of an uncertain future?
Photo: Chrisjtse, Flickr.
In the UK, as in many other countries, directors are legally required to consider material financial risks facing their business, and to report these risks in their corporate disclosures. This can often include the risks posed by climate change—which, after all, can be a material risk for business like any other.
The case against Commonwealth Bank was dropped after the bank released new reporting that recognised climate change as a financial risk. But many directors are still exposing themselves to liability by remaining tight-lipped: it has just been revealed that almost two-thirds of FTSE 100 companies are not including climate risk in
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