Directors in the dock

Published|14.05.08

The recent Lloyd’s report ‘Directors in the dock’ exploring the increasing risk of litigation for Directors identifies climate change as a key risk.

In a survey of global company directors conducted for Lloyd’s it was found that 27% of directors considered that climate change would give rise to liability claims within the next 5 years. However, 67% reported that their board had not discussed the risks to their companies. Low awareness of the issues was seen by 42% as a major obstacle to managing the liability risks and the threat of litigation.

Acclimatise has on several occasions identified the risk of litigation to business arising from a failure to take the impacts of inevitable climate change into account when making decisions. In our report The adaptation tipping point: are UK businesses climate-proof? (available from our resources section) we provided a summary of the risks that companies (and their directors and senior officers), professional advisors, investors, and project financers face.

Reasonable forseeability of climate change and the risk of litigation should be on the radar screens of all companies in their corporate risk assessment procedures.

Lawyers are beginning to acknowledge that there is now sufficient information available on climate change for companies to take it into account in both strategic and project level decision-making. All decisions taken by directors and professional advisers that do not take climate change into account may be open to legal challenge. In the future the courts will examine claims and may decide that it was reasonable, at the time the decision was made or advice given, to have foreseen the impacts of climate change based on the information available in the public domain.

If you would like to learn more about our climate change risk management services and how we can help your company manage the impacts of inevitable climate change, then please contact David Beer, d.beer@acclimatise.uk.com.