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Article name & author

Directors’ Duties Regarding Climate Change in Japan

Author: Commonwealth Climate and Law Initiative

Industry Group: All Industry Groups

Research / Insights - 2021

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. 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.

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Keywords: Board oversight
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