Boards increasingly at risk of climate change litigation

Board members are increasingly at risk of being held to account for alleged reporting, regulatory and fiduciary failures linked to climate change and the fossil fuel sector, Clyde & Co said.

During a seminar on the impact of climate change on D&O cover, the law firm said there are three key types of litigation that will result from climate change:

• Companies failing to fully disclose how climate change affects their business
• Shareholders, pension fund members or investors suing investment and pension funds for investing in businesses adversely affected by climate change
• Companies contributing directly to pollution and climate change

Clyde & Co partner Ned Kirk said: “Regulators like the SEC have already issued guidance on climate change disclosure and are taking action against energy companies. They are also starting to look long and hard at sectors like mining, transportation and insurance.”

James Cooper, partner at Clyde & Co, added: “Underwriters need to ask themselves how they get to understand the climate change risks inherent in these businesses. They need to ask some searching questions about how companies are dealing with climate risks.”