Climate change: liability looms for directors
Climate change: liability looms for directors and professionals
Professionals and company directors should beware the risks of climate change, an environmental lawyer warns. These risks include increases in average temperature, sea level rise, and increased frequency and intensity of extreme weather events, as well as changing regulatory, social and economic expectations.
Phillips Fox climate change partner, Helen Atkins, comments "While the implications of climate change are much talked about, to date few business people have integrated this information into their day to day decision making. The risk for company directors and professionals is that they will become liable for losses suffered as a result."
One area where this issue will really bite is waterfront property. Title boundaries on the waterfront are often defined by reference to the high tide mark. As a result, owners of low-lying waterfront land could literally see their titles washed away by climate change. If this does occur, they are likely to look to recover their losses from those involved in their decision to purchase the property.
But it is not only property professionals who should be concerned. Ms Atkins points out that waterfront property is only an example. "Climate change is a cross cutting issue with implications for every sector of the economy. Business people need to make themselves aware of the likely changes to the physical, regulatory and economic environment, and treat these like any other commercial risk."
Internationally there is growing recognition of climate change as a business issue. A recent report prepared for the Carbon Disclosure Project (a coalition of institutional investors representing more than US $4 trillion in assets) identifies a series of business risks raised by climate change.
The CDP report notes 'The financial impacts of climate change extend well beyond the obvious, emissions-intensive sectors. Companies in the financial services, transportation, semi-conductor, telecoms, electronic equipment, food, agriculture, and tourism sectors among others are also affected' (full text of the report is available at www.cdproject.net).
While this is sobering news, it does not spell disaster. "It is a case of being alert, but not alarmed," says Ms Atkins. "The CDP report contains some good news for businesses that are prepared to do the work. It concludes that 'Managing the financial risks of climate change does not necessarily impose a net cost on companies. Success stories can be identified in virtually every industry sector we examined; substantial commercial opportunities are also being created and captured on the upside.' "