City Research Online

Abstract

Does company law have a role in addressing the global climate crisis? Specifically, do directors of the board have a duty to act on climate change? The recent English cases of BTI 2014 LLC v Sequana and ClientEarth v Shell Plc provide opportunities for the courts to re-examine the directors’ duties under the English company law. Nevertheless, the focus on shareholder interests persists. While the enlightened shareholder value provision in the UK Companies Act 2006 requires directors to “have regard to” non-shareholder stakeholders, this obligation does not make these interests overriding or displace the interests of shareholders. Even where climate risks or environment considerations are interpreted as aligning with the success of the company or the long-term shareholder interests, they are unlikely to drive meaningful change. Coupled with the existing power dynamics within the corporate framework, directors’ fiduciary duties are likely to remain predominantly shareholder oriented. Accordingly, this paper concludes that the capacity of company law, in its present form, to address the pressing global climate challenges is limited. A disproportionate focus on directors’ duties, in particular fiduciary duties, risks diverting attention from more effective avenues of reform. Instead, the paper recommends that policymakers prioritise regulatory initiatives focused on climate-related requirements, such as reporting and due diligence obligations, which are likely to offer a more direct and impactful responseto the crisis we are facing.

Publication Type:	Article
Additional Information:	This is a pre-copyedited, author-produced version of an article accepted for publication in Hong Kong Law Journal following peer review. The definitive published version will be available online on Westlaw.
Publisher Keywords:	climate action, English company law, enlightened shareholder value, stakeholder interest, shareholder primacy, regulatory requirement
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences K Law > K Law (General)
Departments:	The City Law School The City Law School > Academic Programmes
SWORD Depositor:	Symplectic Administrator

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