Directors’ Duties and Climate Risks

When CPD set out on this work in early 2016, we began with the premise that performance and leadership on sustainability-related risks in the Australian corporate sector were lagging – but that the time was ripe for business leaders and regulators to make a more constructive, forward-looking contribution on long-term sustainability challenges. The centrepiece of this work was a ground-breaking legal opinion on directors’ duties and climate risk commissioned by CPD in partnership with the Future Business Council. The opinion found that company directors who ignore or mismanage climate-related risks could be held personally liable for breaching their legal duties under the Corporations Act. This analysis, as well as crucial developments like APRA’s recent statement on the importance of climate risks, has ensured that the financial implications of climate change are firmly on the agenda.

We are continuing are contribution with ongoing research in on two issues on how the findings on directors’ duties apply to decision makers in government bodies and public authorities, and on how businesses and investors can respond to growing demand for sophisticated, scenario-based analysis of their climate-related risks and opportunities.