Directors' Duties Regarding Climate Change in Japan - Report Launch (w/ Dr. Janis Sarra)

Japan’s primary prudential regulator, the Bank of Japan, has acknowledged that climate change poses a systemic risk to the Japanese economy and financial system. There is now overwhelming scientific and financial evidence of the material impacts of climate change on businesses. Since climate change has been recognized by governments, courts, and investors as a material issue affecting the sustainability of almost all companies, corporate directors need to recognize their obligation to address climate-related risks and opportunities.

Directors in Japan have three primary duties, a duty of loyalty, a duty to be in compliance with all laws, regulations, and ordinances, and the company articles, and a duty of care. Directors’ duties are set out in the Companies Act of Japan, the articles of incorporation, and the Civil Code. The obligation of directors to consider the implications of climate change risk is grounded in the duties each director owes to the corporation they serve. In their oversight of management of climate risks, directors must meet the objective standard of what a reasonably prudent person would do in comparable circumstances.

The report will be released in English and Japanese

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