"UK company directors may be liable for climate impacts, say lawyers", 15 March 2024

Company directors in the UK could be held personally liable for failing to properly account for nature and climate-related risks, according to a group of lawyers.

A legal opinion published this week found that board directors had duties to consider how their business affected and depended on nature. These included climate-related risks as well as wider risks to biodiversity, soils and water.

The analysis said directors of UK firms faced serious personal consequences for breaching these duties, potentially including claims for damages or compensation by their shareholders. Even in cases where it was difficult to work out exactly how much money the company had lost, directors could lose their jobs or have their remuneration or exit packages cut.

Few lawsuits have so far been brought personally against company directors on environmental challenges, and none have yet succeeded.

Legal opinions commissioned for other jurisdictions, including Australia, New Zealand and the Philippines, have come to similar conclusions.

Nature-related risks are clear for some industries. The food production sector, for example, is heavily dependent on healthy soil and pollinators to produce crops and livestock...

Martijn Wilder, the chief executive of Pollination Law, said the document “reiterates the need for boards to put relevant nature-related risks on their agendas and be able to demonstrate that they have given those risks proper weight and consideration in decision-making”...