Important English law legal opinion on nature-related risks and directors’ duties published

James Burton acted as environmental law author in an author team headed by Sharif A. Shivji KC and Rebecca Stubbs KC (also leading Karl Anderson and Hossein Sharafi) that has prepared an independent legal opinion tackling this topical area.

The opinion was commissioned by the Pollination Law and Commonwealth Climate and Law Initiative (CCLI).

Nature-related risks arise from dependencies and impacts on nature and include, but are not limited to, climate related risks. The type of nature-related risks faced by a company will depend on its specific business activities, operating locations, and supply chains. 

The opinion recommends directors identify these risks, ensure they are assessed with appropriate action taken to mitigate them, and record the decision-making process in writing. Directors who fail to do so, may in breach of duty and exposed to claims.

The opinion emphasises that nature-related risks fall within existing financial risk categories.  The extent to which a company’s nature-related risks are disclosed should, at minimum, be in line with regulatory requirements. Voluntary disclosure may also be appropriate where there are emerging market standards or investor expectations. Deficient disclosure and liability under the regime is not easy to establish which lends a degree of protection to directors. However, given the increasing public awareness and political prominence in this area, serious failures may have significant reputational, or even financial, consequences for a company.

The law in this area is fast-moving and complex. As a public document, underpinned by comprehensive evidence and authoritative explanation of the legal principles, the legal opinion is likely to become a key reference for both directors and their legal representatives. 

Read the full opinion and executive summary here.