THE LAW AND CLIMATE- RELATED RISK DISCLOSURE
January 01, 2020 by Extinction Rebellion
There are many ways in which the legal system can be better used to protect the environment, both nationally and internationally. The UK could be leading the world in climate- friendly policies. Currently we are lagging behind.
An example of legislation that could help is ‘climate-related risk disclosure’. Many businesses are already reducing their emissions, but this disclosure would mean that they also assess the risks posed by climate change to their activities. Climate-related risk disclosure means publishing this risk assessment.
Creating legal requirements in this area would benefit the general public, pension funds and the wider economy. It would add a layer of mitigation against sudden economic shocks. It should also encourage corporations to invest in greener projects. These may be the cheaper option anyway, given the reducing costs of offshore wind and solar power.
In 2017, the Taskforce on Climate-related Financial Disclosure (TCFD) produced proposals for voluntary climate risk disclosure. Since then, the EU has proposed a new regulation, but has not yet passed a law. In Asia, Japan has published voluntary guidelines, as has the People’s Bank of China. France introduced mandatory requirements in 2015, and Australia is also leading the way. Businesses there must now disclose climate change risks in public financial prospectuses and annual reports. As with all new legislation, it also brings the risk of litigation: in McVeigh v Retail Employees Superannuation Pty Limited, a 23 year old is suing his pension fund trustees for failure to adequately assess climate risks.
The UK does not yet have a legal regime, although in 2020 the FCA will consult a second time on proposals, and other regulators have issued statements in support. It remains to be seen whether the new government will prioritise addressing the most urgent cause of our lifetimes.
Alice currently works for a city law firm. Next year she will do a masters in Environmental law and work for charities in the sector. She is a member of Lawyers for XR.