The Handbook of Board Governance, 2nd Edition

14Climate Change and Directors' Duties: Closing the Gap Between Legal Obligation and Enforcement Practice

Ellie Mulholland

Director of the Commonwealth Climate and Law Initiative and Senior Associate at MinterEllison

Sarah Barker

Global Head of Climate Risk Governance at MinterEllison

Cynthia Williams

Osler Chair in Business Law, Osgoode Hall Law School, York University

Robert G. Eccles

Visiting Professor of Management Practice at Saïd Business School, the University of Oxford; Founding Chairman of the Sustainability Accounting Standards Board (SASB); and Cofounder of the International Integrated Reporting Council (IIRC)

Introduction

Until relatively recently, climate change was the purview of corporate social responsibility departments, to the extent it was considered at all. Siloed from finance teams, senior management, and the board, it was seen as a nonfinancial, ethical, and purely environmental matter. A public position on climate was beneficial for reputational purposes only, with conventional wisdom that climate change could not affect the financial bottom line, let alone lead to circumstances sufficient to impose personal liabilities on directors or senior management.

Yet this is no longer the case. Having reached global consensus in the Paris Agreement to keep the increase in global average temperature to “well below” 2°C and to pursue efforts to limit it to 1.5°C, the world's governments and private sector leaders are taking steps to deliver the required mitigation ...