Directors’ duty towards climate risk mitigation: A critical appraisal of the legal framework and emerging trends

Abstract

With the ever-increasing need for corporate responsibility in mitigating climate risks, this paper aims to analyse the legal duties of directors and their role in climate risk mitigation. This is done by analysing the scope of the codified director duties in the context of climate change under the company law, securities regulations, and environmental regime. However, directors face challenges in understanding the nature of their legal obligations due to the systemic nature of climate change (Breitinger & Litvak, 2018). Against this backdrop, the paper attempts to analyse the scope and interpret the emergence of director duties through judicial pronouncements. The paper adopts doctrinal legal methodology involving a comprehensive review of relevant legal frameworks, including case law and legislative provisions in India. The paper suggests that such legal interventions may aid corporates in addressing climate change, which entails that directors must consider climate risks and conduct themselves accordingly. The paper concludes by discussing what measures corporations must take to help India progress towards becoming a low-carbon economy. The significance of this paper lies in providing a reference for corporations to navigate their responsibilities and take measures to address climate change through legal intervention.

Keywords: Board of Directors, Director Duties, Climate Change, Corporate Governance, Environmental, Social and Governance Norms

Authors’ individual contribution: Conceptualization — H.S.S. and V.M.C.; Methodology — H.S.S. and V.M.C.; Investigation — H.S.S. and V.M.C.; Writing — H.S.S. and V.M.C.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: K22, K29, K200

Received: 26.10.2022
Accepted: 18.08.2023
Published online: 22.08.2023

How to cite this paper: Shekhar, H. S., & Chadda, V. M. (2023). Directors’ duty towards climate risk mitigation: A critical appraisal of the legal framework and emerging trends. Corporate Law & Governance Review, 5(2), 64–75. https://doi.org/10.22495/clgrv5i2p7