Act Now To Prevent Climate Liability

Climate change litigation has doubled since 2015. It began mainly targeting energy companies, but it has expanded to implicate new plaintiffs, claimants, and jurisdictions. It now reaches “other parts of the carbon value chain,” car manufacturers for example, and the legal arguments have leap-frogged past pollution to include human rights, “greenwashing,” fiduciary duty, consumer protection, and more recently cases concerning climate change adaptation. For risk managers, climate change liability is a complex topic that will touch on almost every part of a business’s operations. Companies need to incorporate climate liability into their controls and procedures, including risk and corporate governance frameworks, supply chain due diligence, health and safety, and quality control. The growing threat of litigation and changing risks mean that actions taken now will set the terms of future climate change-related liabilities and litigation. Directors and officers may face litigation over their failure to carry out fiduciary duties related to climate change. U.S. companies could also face securities class action lawsuits based on climate change related to disclosures or regulatory actions.