Resilience climate change event
– To disclose or not to disclose? – as pressure to disclose emissions increases, businesses will have to grapple with how much information to make public, with an eye to the fact that disclosing too much, or too little, both come with their own liability risks – Contracts and supply chain issues – contracts must comply with the law but there are many voluntary standards that are not well defined. Contracts must also be underpinned by good procedures, so the advice
– Innovative risk transfer solutions – as climate related events such as floods or hail increase in frequency or severity, they may be recategorized from “secondary” to “primary” risks and repriced. Alternative risk
transfer solutions are coming to the fore, such as “cat” bonds and “parametric” insurance
Balancing competing risks and duties is not straightforward. Therefore, climate change modelling must be part of the day-to-day focus of the board. Decision-making must also be documented to ensure the business is not exposed to liability risks.
was to agree a taxonomy for sustainability. Look at Tier 1
relationships and ensure that Tier 2 and 3 suppliers are being held to those same standards. Implement audit rights and future-proof contracts with “change of law” terms against which costs are allocated. Termination is the ultimate recourse – Considerations when changing suppliers – if a supplier is compromised in some way and cannot continue to provide goods or services, termination and compensation rights will depend on whether this was beyond the suppliers’ control (force majeure) or whether a breach of contract occurred
Simon Konsta, Partner, Clyde & Co
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