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Boardroom lessons
Looking more closely at fiduciary duty, climate disclosures and litigation risk, a second panel discussion was chaired by Anthony Hobley, Co-Chair of the think-tank Carbon Tracker. He sought the views of Kevin LaCroix, Attorney and Author of the D&O Diary blog, Nadine Robinson, Technical Director of the Climate Disclosure Standards Board and Will Martindale, Director of Policy and Research at the UN’s Principles for Responsible Investment (PRI). The point was made that fiduciary duty has in the past been seen as a reason not to address climate change or to disclose its potential risks. Now that it’s clear that climate change- related losses are real and significant, that argument has become harder to sustain. “If you don’t tell your own story via transparent disclosure, someone else will tell it for you,” was Nadine Robinson’s warning. Will Martindale summed it up like this: “We’ve moved from the idea that fiduciary duty stops at sustainability, to the idea that fiduciary duty requires sustainability.”
He added that many businesses who are signatories to the UN PRI believe that at some point there will be major policy disruption – that “policymakers will one day realise that they will have to phase out combustion engines, put a meaningful price on carbon, move away from coal and gas power. So if fiduciary duty right now is looking at 20, 30, 40-year liabilities, it’s entirely appropriate - arguably a requirement - to be considering that ‘inevitable policy response’ and putting in place action now to mitigate any financial dislocation that results from that.” Panellists pointed to a whole raft of global developments to demonstrate why climate change is such a core component of fiduciary duty: from the UK’s leading commitment to net-zero by 2050 to the Canadian Expert Panel’s recent Report on Sustainable Finance, legislative changes in South Africa and Brazil, and Chinese policymakers’ increasing focus on the importance of sustainability to financial regulation.
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