“Directors of companies incorporated in the UK could face action from shareholders in British courts for ongoing damage to the environment or communities in any part of the world under new Companies legislation which takes effect on Monday (1 October) according to lawyers at LG, a London-based business law firm.
“This legislation opens the door for directors to be sued in British courts for damage to the environment in any part of the world,” said LG’s Paul Lester, a partner specialising in corporate law.
“This is genuinely ground breaking in that it is no longer going to be enough for directors solely to focus on the bottom line when assessing their company’s performance – they will also have to consider what impact the company’s activities might have on others and be able to demonstrate that they have fulfilled their corporate and social responsibility as well.”
“The new Companies Act pushes the environment higher up the directors’ agendas – and will force companies to be able to demonstrate and verify their environmental and social practices around the world,” said Colleen Theron, head of LG’s environmental practice. “The impact is potentially much greater, as businesses will be forced to carry out internal risk assessments and review all their policies and procedures on the environment and social issues to avoid the risk of lawsuits.”