Jamie Smyth’s article on Australia’s coal mining sector describes how a company, which had wanted to build a railway line for a coal mine, was unable to do so because of environmental concerns. This meant no one would insure them or their directors for public liability (“Australia coal mining sector warns of ‘dire’ risk from ESG insurance barrier”, Report, May 15). This is the tip of an iceberg. It is no wonder they were uninsurable. It is perfectly plain that green campaigners will increasingly be taking companies to court if they turn a blind eye to the damage their operations are doing. Few doubt that companies have some responsibility to address the climate challenge. Taken together with those of governments and individuals, these responsibilities must deliver a sustainable planet. But what is the company’s responsibility? We don’t have a clear definition. Yet if the climate crisis is not addressed, companies will be called to account for their failure. This has happened before. In the 1960s, asbestos companies were aware of the hazards of their products. At the time, it was not illegal to mine or process asbestos without proper protection. By the 1980s, the mood had changed. The asbestos companies were taken to court and sued out of existence. They nearly brought down the insurance industry with them. Insurers today would be crazy to cover such an open-ended risk for a company that, in the future, might similarly be deemed not to have fulfilled its responsibilities in addressing climate change. Defining the responsibility of companies is not just essential for a sustainable planet. It is also essential as part of the quasi-legal architecture that allows commerce to flourish and gives companies a licence to trade. Some, such as the Climate Principles for Enterprises group, have made an attempt to define enterprise obligations. But the issue has yet to get the prominence it deserves and there is no global consensus on what companies need to do. That needs urgently to be addressed. By the time we feel the effects of an out-of-control climate, and our great energy, power and transportation companies are taken to court for breaching their duties, it will be too late.
David Pitt-Watson Visiting Fellow, Judge Business School University of Cambridge Former Chair, UN Environment Finance Initiative, London NW5, UK.