ICD x CCLI x ClientEarth

Directors’ Duties and Responsibilities and Disclosure Obligations under Philippine Law on Climate Change Risks

April 27, 2023

Climate change, as a constant looming risk over human life, has resounded a dire call for action – to make great leaps in global conservation efforts. Despite the international initiatives, practices, and contingencies put into action throughout the years, the U.N.’s Intergovernmental Panel on Climate Change’s (IPCC’s) report highlights the continuously growing global risk. In light of this, the Commonwealth Climate and Law Initiative (CCLI) published an opinion in the context of directors’ duties and financial risks. The event held on April 27, 2023, in Fairmont Hotel, served as a platform to launch the opinion piece and spur discussions on climate change risk consideration in operations.

As cited by Securities and Exchange Commission (SEC) Commissioner Mc Jill Bryant Fernandez in his Keynote Address, the increasing emergency would subject the country to greater risks. The Philippines is currently one of the more susceptible countries to natural disasters. Without action, climate risks in the form of hazards, financial risks, and external pressures would reshape the market and skew the country’s economic position. Atty. Alex Cooper from Commonwealth Climate and Law Initiative (CCLI) further emphasized this notion and its correlation to directors’ duties.

The published position paper of the UK-based organization held the opinion that as directors with authority, they hold the responsibility to mitigate business-centered climate change risks. It was urged to factor climate risk into its operations and risk management strategies. Part of a director’s priorities are minimizing risks, and safeguarding share prices. Through climate change, businesses face financial, legal, and litigation-related risks – all of which are considered the responsibilities of the board. With the aid of the International Financial Reporting Standards (IFRS) Foundation and SEC, sustainability-related disclosures are being incorporated into relevant regulations and standards. In time, the compliances will lower the risks businesses face, and open the opportunity for increasing share prices. With an environmentally friendly reputation and lesser investor risks, it is less likely for prices to drop. With reminders of the COP26 agreement in 2021 and the Paris Agreement and 2015, directors are encouraged to incorporate sustainable measures through their corporate social responsibility (CSR) projects and operational practices.

To view the legal opinion published by the CCLI by scanning the QR code below or through this link.