Corporate Fiduciary Duties and the Climate and Biodiversity Crisis

This Article argues that addressing one of the most urgent environmental challenges facing humanity today—the global climate and biodiversity crisis—calls for a transformation at the heart of corporate law: its fiduciary duties. After demonstrating how current corporate fiduciary duties are implicated in this crisis, we argue for reform of fiduciary duties operating at two levels: those governing directors and officers of business corporations, and those governing institutional investors and asset managers. We then distinguish between two general kinds of corporate fiduciary duties: permissive and mandatory. We contend that corporate law should accommodate a more expansive understanding of fiduciary duties by either explicitly permitting climate- and biodiversity-related considerations or requiring their translation into measurable actions.

Such an expanded view of fiduciary duties would allow or, in some cases, require corporate directors and officers, as well as institutional investors and asset managers, to consider environmental risks and impacts and to identify strategic opportunities to mitigate or adapt to them, while continuing to advance long-term economic performance. We conclude by outlining existing corporate fiduciary duty frameworks that include broader environmental considerations and identifying the expanding landscape of non-financial disclosure, reporting, and due diligence regimes as a promising direction for their further development.