Climate change consideration part of Singapore directors’ duties, legal opinion says

The opinion by a group of independent legal counsel suggested that disregard could lead to litigation

Climate change consideration part of Singapore directors’ duties, legal opinion says

Climate change consideration is part of Singapore directors’ duties, says a legal opinion authored by a group of independent legal counsel.

According to a press release, directors are “obliged” to address the impact of climate change in line with their duties to act in their organisations’ best interests. A failure to do so could result in directors facing litigation, especially if climate risks will affect the business.

“Given the seriousness and public concern over climate change, directors of Singapore companies must be aware that they will incur criminal and civil liabilities if they do not inform themselves on how their companies impact or are impacted by climate change and factor these into their decisions as directors,” said lead author Jeffrey Chan Wah Teck SC, who is the senior director at TSMP Law Corporation.

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The Commonwealth Climate and Law Initiative-commissioned opinion is entitled Directors’ Responsibilities and Climate Change under Singapore Law. Joining Chan as authors are Shook Lin & Bok LLP partner Dr Joseph Chun, NUS Law associate professor Dr Ernest Lim, PDLegal LLC managing partner Peter Doraisamy and PDLegal LLC partner Gerard Quek.

“The legal analysis is based on evidence. As the impacts of climate change on Singapore become more visible and legislative and regulatory responses strengthen, this affects the standards of conduct directors must meet to fulfil their duties,” Lim said.

Lim pointed out that the opinion considered a recent issuance of environmental risk management guidelines by the Monetary Authority of Singapore, which he said set out “their expectations that directors and senior management of financial institutions should maintain oversight of environmental risk management and be assigned specific responsibilities in this regard.”

Earth on Board founder and CEO Philippe Joubert supported the opinion’s analysis.

“Climate change is no longer a risk; it is a reality. Ignore it or dismiss it, is a case of negligence for a board, it puts the company in very dangerous waters, and it is economically irresponsible to their investors, socially unacceptable for their stakeholders, and legally dangerous for the directors themselves,” he said. “The Chan legal opinion makes clear that Singaporean directors, acting in the best interests of their companies, have a duty to respond to climate change risks.”

The opinion was unveiled yesterday at a webinar co-hosted by the Law Society of Singapore and the EW Barker Centre for Law and Business at the NUS Faculty of Law.

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