Are Company Directors Creating Personal Liability?

feature image

Will shareholders in the future sue directors for failing to use and act upon reliable climate risk data available today? The same question can be asked of auditors.

Video: ABC News (Australia)

This begs the question. Are businesses and government suffering from target fixation? The desire to meet climate disclosure requirements, especially around the 2050 and 2090 timeframe, is blinding them to threats immediately in front of them. I would argue with respect to physical climate risk, the most important years are the next 15 to 20. Beyond this period, changes in technology, energy, the economy and geo-politics could easily make any expenditure today misguided. Aside from very large works such as establishing a new mine, there are few businesses that could look past this investment horizon.

 

 

Video: Guardian Australia

While existing Board members and management will likely be long gone before 2050/90, they will be liable for what happens in the next 10 to 20 years. Indeed, for preventable events today and tomorrow. If real data (not synthetic modelling), isn’t being used, I can envision shareholders in the future looking to legal recourse against companies and directors.

How is this liability being realised? The answer is target fixation, a real-world problem. I believe this is a significant contributor to businesses and government being blinded to real world threats. What is target fixation? This is a common military hazard associated with strafing runs during ground support missions. The pilot is so fixated on his run toward the objective that he fails to pull out in time, pulling up too late or not at all. Similarly, the fixation by a business on a 2050 target, risks being unprepared for an entirely foreseeable emergency today or tomorrow.

 

Taking Action Today

When it comes to mitigating the impact of climate risk, the next 10 to 15 years will be critical. The Early Warning Network features a team with expertise in meteorology, climate intelligence and spatial risk, offering round-the-clock monitoring of weather risks for our clients, and our staff are ready to provide the insightful data necessary for organisations to make informed decisions about operations in this 10 to 15 year time period.

This post originally appeared on our EWN website.

Share this blog

Related Posts