Directors' Duties and Climate Change

Synopsis

Boards of directors are ultimately accountable to shareholders. As long-term stewards of businesses, and in the face of the threats of climate change, directors’ duties are increasingly more varied and sophisticated. Join us as we discuss the sea change where directors will be held to account for their management of climate risks by internal and external stakeholders.

This Primer on Climate Governance is being co-organised with the Bar Council Environmnent and Climate Change Committee in anticipation of the upcoming global “Legal Primer on Directors’ Duties and Disclosure Obligations” in respect of climate change which will be published soon. More detail on this project below.

“Boards  have a critical role to play in steering their corporations to better manage and mitigate climate related risks in their strategies, given the urgency as evidenced by the increased frequency and seriousness of the climate change impacts on economic activities and societies.“  To’ Puan Janet Looi

“It wasn’t until I joined my first board that I realised the scale of the challenge facing directors when it comes to tackling Climate Change in the boardroom: we need to approach this with the same depth, rigour and professionalism as we do all other aspects of board activity, and yet despite the urgency, there is no ready how-to manual that NEDs can turn to.  Enter Chapter Zero: thanks to superb support from experts across the business and scientific community, and the determination of our growing membership, we are plugging this gap.” Karina Litvack

“The reality of climate change is melting away the reverie that the whole point of business is to maximise shareholder value. Business leaders must overcome the tendencies of denial and resistance to change. Instead, the new paradigm calls for leadership and courage to align business objectives with the aspirations of society. Businesses that are more aware of their role in society, and strive to take ownership of their responsibilities to all stakeholders, will emerge to be the most competitive. In so doing, they will be able to manage the risks and seize the opportunities presented by climate change.” Kiu Jia Yaw

Agenda

5pm: Introductory remarks by CGM (4 min)

Welcoming remarks by Mr. A. G. Kalidas, President of the Malaysian Bar (4 min)

5:10pm: Keynote address by YBhg Tan Sri Richard Malanjum, former Chief Justice of Malaysia (15 min)

5:25pm: Presentation by Universiti Malaysia’s Ecolawgy (10 min)

Speakers:

-Introduction on Ecolawgy by Jowena John (Director, Ecolawgy UM and 3rd year law student).

-IEMC Best Oralist will share his views on the moot problem, difficulties faced in advocating for climate change and how does climate change affects Malaysia by Abdullah Abbas bin Mohd Jefry (Best Oralist and 1st Runner up, Internal Environ-Moot Competition 2021 (Open Stream) and 3rd year law student).

-IEMC Best Oralist on the challenges faced in dealing with moot problem, scarcity of Malaysian laws in protecting children’s rights and the next generation and input on climate change by Shahlini Sree Kumar (Best Oralist and Champion, Internal Environ-Moot Competition 2021 (Novice Stream) and 2nd year law student).

5:35pm: Panel discussion “Directors Responsibilities and Climate Change”

Panellists:

To’ Puan Janet Looi (Skrine)

Karina Litvack (founder CGI, WEF contributor)

Moderator: Kiu Jia Yaw (Deputy Co-Chairperson of the Bar Council Environment and Climate Change Committee)

6:15pm: Thank you note by CGM.

Contributors

Tan Sri Datuk Seri Panglima Richard Malanjum served as the ninth Chief Justice of Malaysia and fourth Chief Judge of Sabah and Sarawak. He retired from the bench in April 2019. Before joining the judicial service, he was a practising lawyer and served as the president of the Sabah Law Association.

To’ Puan Janet Looi is the Senior Partner of Skrine and Head of the Corporate Division of Skrine. She also is the lead Partner for the Corporate Governance Practice of the Firm.  Janet has been named as a distinguished practitioner and leading individual in for her takeovers, mergers & acquisitions and cross borders transactions work by several leading publications such as Chambers Global and Chambers Asia Pacific and Who's Who Legal – The International Who's Who of Business Lawyers.  Janet is also Head of Skrine’s Environmental Practice of Skrine which advises clients on all aspects of environmental compliance and directors’ personal liability risks. The practice also advises on licensing requirements and investigations by the Department of Environment of Malaysia, legal aspects of water supply and water resources management, including requirements under the Water Services Industry Act and the Water Services Commission (SPAN) licensing regime.  Janet was the lead Partner for the joint Government of Malaysia and Government of Denmark Integrated Water Basin Management (IRBM) project, which culminated in the drafting of the Kedah Water Resources Enactment.

Karina Litvack serves on the boards of Italian Oil & Gas major Eni S.p.A., where she chairs the Sustainability & Scenarios Committee, and serves on the Remuneration Committee; Viridor Waste Management Limited, a KKR portfolio company, where she chairs the Board Sustainability Committee; the CFA Institute, home of the professional qualification for investment management professionals; and Business for Social Responsibility, a consultant specialising in sustainable business practice.  She is an Executive Board Director of Chapter Zero, and serves on the Senior Advisory Panel of oil & mining consultant Critical Resource and the Advisory Council of Transparency International UK. Previously, Karina had a 25-year career in Finance, latterly running the Governance and Sustainable Investment activities of UK asset manager F&C Investments*.

Since the passage of the Paris Agreement at CoP21 in 2015, Karina has been working to build a global network for fellow NEDs to share experiences, engage with technical experts and stakeholders, access specialised training, and help to drive more effective climate transition strategies in the boardroom. Under the auspices of the World Economic Forum, she co-founded the Climate Governance Initiative (CGI), home of the CGI Principles for Non-Executive Directors, and with colleagues in Italy, Malaysia, France, the UK, Canada, Russia, Brazil, Switzerland and several others in the pipeline, has been working to build a global network of national Chapters for directors.  Her focus in Chapter Zero, the UK Chapter of the CGI network, is on partnering with experts to develop new interdisciplinary content specifically designed for non-executive directors, and leveraging these across the global network of Chapters.

* now BMO Global Asset Management, a unit of the Bank of Montreal

Kiu Jia-Yaw is a practising lawyer and an advocate for sustainable development, who serves on the Bar Council Environment and Climate Change Committee, which advises the Malaysian Bar Council in matters relating to the environment and climate change. He has a particular focus on enhancing public participation, climate litigation and environmental justice. Jia Yaw is also Secretariat Member of the All-Party Parliamentary Group of Malaysia on the Sustainable Development Goals (APPGM-SDG), an independent group formed by Parliament to help Malaysia achieve the SDGs through the localisation of the goals. He was a Chevening Scholar, having read a Masters in Environmental Law (LL.M.) at SOAS, University of London.

About Ecolawgy, University of Malaya

Ecolawgy UM is a sub-project under the University of Malaya Law Society. Every year, the UM Moot Club organises an internal mooting competition but this year, they engineered the competition in collaboration with Ecolawgy UM. The moot competition this year centred on environmental issues, developed around the themes of climate change, intergenerational responsibility and sustainable development. Their efforts were supported by legal academics and practising lawyers as it echoes Ecolawgy’s vision, that is to raise awareness among the students on national and global environmental issues. The event received good participation from students in the Faculty of Law, UM.

Background

This Primer on Climate Governance is being convened in anticipation of the upcoming “Legal Primer on Directors’ Duties and Disclosure Obligations” in respect of climate change which will be published soon.

This project was conceived in response to Principle One of the CGI Principles (“Climate Accountability on Boards”), and focuses on the legal duties and obligations of directors in respect of climate change, an oft-misunderstood topic in the director community.

Country chapters of the Climate Governance Initiative partnered with the Commonwealth Climate & Law Initiative (CCLI), a research and outreach initiative hosted by the legal faculty at York University and the University of British Columbia in Canada, and the University of Oxford in the UK. CCLI focuses on the legal basis for board directors to consider, manage and report on climate-related risk, and the circumstances in which they may be liable for failing to do so.

As Karina Litvack, Chairperson of the Climate Governance Initiative describes, “the idea for our Primer arose following the publications of expert legal opinions, the earliest of which was in 2016 in Australia (Hutley Opinion, subsequently updated in 2019 and 2021) and followed by Canada last summer (Hansell Opinion). As these opinions began to gain prominence in specialist legal circles and spark further such initiatives in other Common Law countries, we in the CGI realised that 1) they are not terribly accessible to board directors, most of whom are not legally trained, and 2) many directors labour under the misapprehension that their legal obligations may in fact preclude them from pursuing Paris-aligned climate policies, particularly if it means “leaving profitable business on the table”.  In fact, as we were reassured to learn from these opinions, legal thinking on this topic has evolved considerably, and converged across both Common Law and Civil Law jurisdictions around some pretty clear universal principles.

In order to make this material accessible to directors, as well as expand our coverage from Common Law to Civil Law jurisdictions, the CGI invited the CCLI to produce the CGI-CCLI Primer on Climate Change: Directors’ Duties and Disclosure Obligations, which we conceived as a layperson’s guide to these expert opinions. It is a succinct, highly readable summary of the key principles and takeaways that board directors must know and act upon. It is structured as an introductory general section that lays out common principles that apply universally across all major jurisdictions, complemented by 18 country-specific notes plus one for the EU27.  The geographic scope of the report covers virtually all countries where the CGI has either well-established or prospective chapters.”