Green Boardrooms?

Abstract

Corporate and securities law tools are increasingly being used to address climate change. Disclosure of climate-related business risks and shareholder proposals and engagement have grown in the United States and globally, as have broader efforts to use these tools to address environmental and social issues. Emerging fiduciary duty suits in other jurisdictions claim that corporate boards have failed to monitor and manage climate-related risks adequately. However, legal scholarship has failed to assess whether these efforts are actually changing corporate behavior. This Article draws on original interviews with corporate leaders and investors in the United States and Australia to assess the effectiveness of corporate and securities law tools in addressing climate change. It finds that while disclosures and shareholder proposals related to climate change have been extensive, they have not yet changed corporate behavior much, if at all. The Article therefore proposes a multi-pronged approach to increase the future effectiveness of disclosure, shareholder proposals and engagement, and fiduciary duty suits. This study offers new insights to the old debate over how corporations can and should be used to address societal problems.

Keywords: Climate change, corporate and securities law, disclosure, shareholder proposals, fiduciary duties, environmental law, corporate behavior

JEL Classification: K22, K32