Summary
Rajiv Lall, Professorial Research Fellow at the Singapore Green Finance Centre, spoke about practical implications of climate liability drawing on his research experience and on years working at international financial institutions. The presentation explored the links between climate change law and broader behavioural changes on boards, and the need to consider corporate pathways to net zero within a wider context.
Key Takeaways
- Litigation and regulatory requirements can make existing or prospective board members hesitant. Certain qualified individuals opt not to join boards because of the prospect of being held personally liable, even if they are unlikely to be targeted by legal action. When directors are on boards, certain regulations can lead to defensive rather than proactive behaviour.
- Understanding of context is vital when considering how companies and countries in the Global South might reach net zero. Especially in the Global South, net zero action may not stem fossil fuel use immediately. Investment and deployment of a range of technologies such as hydropower, solar energy, battery storage and improved grids, is needed to reduce emissions.
- Legal requirements can change board procedure, but are less effective in influencing board ethics. Climate-related regulation, alongside legislation in other areas such as human rights, can be effective in changing board practice. However, this does not always include fundamental ethical changes in directors’ views and behaviour.
- Ensuring ethical behavioural changes on boards requires a different approach. Self-reflection about values, possibly facilitated by a third party, can help boards understand the ethical consequences of their decision-making. It is important that values and changes come from the top, so alignment between the Chair and CEO is crucial for addressing climate change.
Conclusion
Regulation is an important way to change board behaviour to address climate change, but can sometimes make boards, especially in the Global South, less proactive out of fear of liability. Legal requirements can effectively change board behaviour and practice, but more action on behavioural change is needed to shift board ethics and values towards net zero. When examining climate strategy in the Global South, it is particularly important to take a nuanced perspective and understand that the road to net zero is not always linear.
Slingshot