Our tool kit – Managing climate risk in New Zealand in 2020, includes practical advice covering key issues for directors, baselines for identification and management of climate risk, and minimum questions that boards should consider.
Management of climate risk is not about compliance: understanding climate risk is key to mid-long term strategy and resilience.
This publication includes our insights from observing trends in climate change litigation and other litigation involving major social issues, and attempts to give directors the benefit of advice that they might wish we had had ten years from now.
Corporate decisions are likely to be assessed with hindsight, in the context of the pressures from climate change on society in the next 10-15 years. Eliminating hindsight is difficult, particularly with an issue overlaid with emotion and quickly evolving social expectations. Taking action now is critical for businesses intending to stay aligned with their shareholders and stakeholders through to 2030.
The tool kit draws on our engagement with boards of directors and climate change specialists and covers:
- why boards should engage on climate risk in 2020
- lessons learned in forecasting climate litigation risk
- lessons learned from COVID-19 in managing climate risk
- risk factors for directors
- examples of TCFD reporting to date
- hot tips for directors taking action through 2020
- key steps for directors managing climate risk from 2021 and onwards, and
- detailed guidance on what ‘reasonable care’ expectations are for managing of climate risk.
This publication builds on the Chapman Tripp 2019 legal opinion on directors’ duties to raise material climate-related financial risk at the board table. Specific requirements for climate change risk reporting on a 'comply or explain' basis were announced in September this year – see our commentary here.
We are witnessing a step change in climate-related business risk. Climate change is no longer a mere environmental concern: for many businesses, it presents a material financial risk.