London corporate partner Melanie Wadsworth authored an article for ESG Investor that discusses the predicted increased scrutiny that directors will face regarding their firms’ climate strategies.
Wadsworth explains that a recent case relies on a piece of legislation that came into effect as long ago as 2006 and that applies to every company incorporated in the U.K. — Section 172 of the Companies Act 2006. The act requires company directors to act in the way they consider, in good faith, is most likely to promote the success of the company for the benefit of its members as a whole.
“In doing so, each director must have regard (amongst other things) to the impact of the company’s operations on the community and the environment,” noted Wadsworth.
The article overall highlights that the concept of environmental responsibility is becoming infinitely wider, and few organizations can escape its reach.