A legal opinion commissioned by the Commonwealth Climate and Law Initiative (CCLI) and authored by Canadian law firm Resilient LLP has stated that climate and nature risks fall within corporate directors’ legal duties under Canadian law.
Amongst other things, the opinion says directors may face legal and financial consequences for “failing to meet disclosure obligations, particularly where companies omit or downplay material risks related to nature”.
While acknowledging that Canada does not have a standalone legal framework for nature-related disclosures, the opinion concludes that companies' disclosures of risks, required by securities laws, should include material nature-related risks.
The opinion reads: “It is our opinion that: the identification of a [nature-related risk] that would reasonably be expected to have a significant effect on the market price or value of the securities of a corporation with a continuous disclosure obligation is a material fact that must be disclosed through the regular provision of documents such as proxy circulars and financial statements.”
Following the release of the opinion, the CCLI stated: “If there is uncertainty about whether a nature issue is material directors should err on the side of caution and disclose it. Directors and companies who do not disclose material risks could be liable.”
