Managing the legal risk of climate change

As outlined in two of our recently published articles, the legal landscape is becoming more accepting of lawsuits related to climate change. Preparing for legal climate change risk will likely become more and more important for organisations.

Public and private sector organisations involved in or interacting with the natural environment should consider implementing legal risk in their climate risk management process. This type of consideration would include asking questions about possible costs an organisation is liable to incur, if legal risks of climate change are not considered – be it regarding revenue losses and profit, or different types of penalties. Tackling these questions would mean including climate legal risk in an organisation’s overall strategy and its decision making processes.

In order to manage climate legal risk, organisations need to be aware of the physical risks climate change poses to them and their assets, be it estate or issues along the value chain. Furthermore, organisations need to check relevant laws and identify the consequences of climate impacts on business or any other objectives; in doing this, legal implications for the organisation’s duties and rights are also identified. The outcome of these implications should be evaluated in terms of how tolerable the legal risk is for the organisation. Intolerable risks, so those with a high likelihood and negative consequences, should be managed accordingly and demand adaptation action.

If legal risks of climate change are recognised early, organisations can react and take appropriate measures before legal consequences arise. This demands putting procedures in place that will include legal considerations in climate risk management strategies and adaptation strategies.

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Post written by Elisa Jiménez Alonso | 28th June 2016

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