Company directors could be taken to court if they don’t take into account risks associated with climate change.
Under a new law, supported by Prince Charles, directors and pension fund trustees could be held liable for contributing to climate change or not reasonably managing the risks associated with it.
They could also be in trouble for misleading investors about the business risks of climate change or failing to comply with legal reporting requirements.
It is called the Commonwealth Climate & Law Initiative (CCLI) and is focused on four regions: Australia, Canada, South Africa and the UK.
It was launched during the Commonwealth Heads of Government meeting in Malta last week.
The law comes after the Bank of England Governor Mark Carney warned company directors could be held legally liable for failing to manage climate change risks in September 2015.
Last month Exxon and Peabody Energy were taken to court in New York over claims they misled the public and investors about the dangers and potential business risks associated with climate change.
CCLI is a joint initiative between the University of Oxford’s Smith School of Enterprise, law firm ClientEarth and The Prince of Wales’s Accounting for Sustainability Project.
Ben Caldecott, Programme Director at University of Oxford’s Smith School of Enterprise and the Environment, said: “Company directors could be at risk of litigation if they mislead investors and the public about climate change.
“They may also face litigation for having contributed to anthropogenic climate change. This is a very new area but one with potentially significant consequences.”
A new law called the Cost Effective Energy Measures Bill could save the UK £12 billion per year on energy costs if it is implemented.