2021 Hutley opinion on directors duties and climate change

The 2021 Hutley Opinion emphasises the increasing standard of care expected of directors in managing climate-related risks and opportunities, and highlights legal risks surrounding “greenwashing”, especially as scrutiny of climate-related disclosures and commitments grows.

Its key findings are:

• The standard of care to be exercised by directors with respect to climate change has “risen and continues to rise”;
• Net zero commitments by companies are becoming common and appear to be regarded by many directors as an appropriate or necessary step in the discharge of their duties;
• Companies making net zero commitments should have “reasonable grounds” to support the representations contained within them – otherwise, a company (and its directors) could be found to have engaged in misleading and deceptive conduct; 
• There are practical steps companies and directors can take to reduce the likelihood of liability arising from a net zero commitment.​