Clyde & Co Resilience Climate Change Risk Liability Report


Liability and the evolving litigation landscape

CORPORATE LIABILITY Businesses have a responsibility to evaluate future, as well as present, risks. When it comes to physical risks , companies should be conducting thorough risk assessments before any significant investment takes place. Will a new hotel built on the coast still attract tourists in five to ten years at the rate sea levels are rising? What is the likelihood of a planned factory or warehouse having to be mothballed if its operations are frequently disrupted because it is built in an area that becomes a high flooding risk thanks to climate change? Will agricultural land be able to provide the produce and output levels and quality that its current owners base their business models on? Failure to answer these or similar questions satisfactorily – or to ask them at all - could result in significant financial losses for which investors will want redress. In this, the advent of attribution science could provide as much an opportunity in terms of future forecasting as it poses a threat.

We are already seeing a broad range of new types of liability exposures as well as novel litigation tactics being deployed in the battle by activists to force change and by cities and others to recover the costs of climate- related damage and resilience measures. To date, many of these proceedings have failed to overcome substantial legal hurdles, but that could be about to change. Several cases underway around the world are being closely watched, creating the potential for copycat claims against a broadening range of targets in the event of a successful outcome or even should cases overcome preliminary hurdles at the pleadings stage.

It’s difficult to think of a sector which won’t be impacted by climate change.

- Neil Beresford, Partner, Clyde & Co, London

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