Sharif A. Shivji KC, Karl Anderson and Hossein Sharafi author landmark legal opinion on nature-related risks and directors’ duties

March 13, 2024

Sharif A. Shivji KC, Karl Anderson and Hossein Sharafi have authored a groundbreaking legal opinion on the interaction between director’s duties and nature related risks. Instructed by Pollination Law and Commonwealth Climate and Law Initiative (CCLI), the opinion, which is co-authored with Rebecca Stubbs KC of Maitland Chambers and James Burton of 39 Essex Chambers, concludes that directors should consider their company’s nature-related risks as part of their duties to promote the success of the company and act with reasonable care, skill and diligence.

The opinion recommends that directors identify and consider the extent to which the company faces nature-related risks, ensuring these are appropriately assessed and evaluated. They should also take steps to manage and mitigate these risks (where appropriate), which may include designing and implementing a framework for systematic risk management.

The opinion also emphasises that directors should consider the extent to which their company’s nature-related risks should be disclosed. At a minimum this should be in line with regulatory requirements, but in some circumstances directors may decide that compliance with their duties may be better achieved by giving voluntary disclosure where there is an emerging market standard or investor expectation to do so. Under some financial regulations certain companies already have legal duties to report on material nature-related risks and their impacts on nature.

As a public facing document, the opinion is likely to become a go-to reference point for both directors and their legal representatives when considering this complex and fast-moving area of company law.

The link to the opinion and the executive summary are available on CCLI’s website.