The impact on directors’ duties and climate change

Over the course of the last decade we’ve seen a shift from the traditional “environmental” concern that is associated with climate change to a new era of climate change that focuses on business and corporate risk.

With more companies considering climate change related risks and with the landmark ruling in May 2021 that Shell is to be held accountable for and ordered to reduce their emissions by 2030, we look at which of the directors’ duties are most relevant in this evolving area of law and practice…

Duty to promote the success of the Company for the benefit of its members as a whole.

Whilst this is primarily a financial duty, the obligations of a director to consider the wider obligations of such duty clearly align with climate concerns. These wider obligations are:

The likely consequences of any decision long term;

The impact of the company’s operations on the community and the environment; and

To maintain a reputation of high standards so business conduct.

Each of these specifically aim to take into account the environmental impact of a director and/or company decision.  

Duty to exercise reasonable care, skill and diligence.

This duty is more a general duty which links into all other director’s duties and puts a great deal of emphasis on a director being diligent towards their and the company’s decision making.

To request a copy of our in depth Guide to Directors’ Duties and Responsibilities, please speak to our Corporate and Commercial team on 0161 926 9969 or email us corporate@mlplaw.co.uk.    

You can also view our in depth blog on Directors Duties and Responsibilities here.