Director's Duties And Climate Change – Round One To The Directors?

The courts of England and Wales have recently refused two different attempts to challenge the decisions made by company directors in relation to climate change risks. In this article, we look at the reasons behind these two decisions, and consider what they might mean for the ever-growing area of climate and ESG litigation.

Key Takeaways

• Courts will be very reluctant to set aside the decisions made by directors, or to impose specific obligations in relation to their management of the company. It is generally the responsibility of directors to make commercial decisions on how best to promote the success of the company;
• It is not enough for shareholders to prove that the company faces material risks as a result of climate change (or other ESG considerations). They will need to prove that the directors' decisions in response to those risks is outside the range of reasonable responses open to them, in the context of the other factors that directors need to take