Climate Change-Related Risks: A New Liability Risk for Corporate Directors and Officers?

Environmental liability for directors and officers is well established. Federal and provincial statutes in Canada impose statutory duties on directors and officers to take all reasonable care to prevent the corporation from contravening environmental legislation. Directors and officers have also been held civilly liable under causes of action such as negligence, nuisance, and strict liability for environmental harms.

Director and officer liability for climate change-related risks is less clear. Even in the middle of the Covid-19 pandemic, concerns remain about climate change. Investors continue to closely track climate change disclosure and associated corporate governance practices. Inadequate disclosure of climate change risk, coupled with a lack of good governance, could be the basis for a new wave of liability for corporate directors and officers.

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