Put ‘climate change’ on the agenda

For the average private entity, the concept of Climate Change seems distant and inapplicable. 

This could not be less true. It has been found that only 100 companies around the world are responsible for about 71 percent of industrial emissions that cause global warming. 

Equally, the private sector can and should be an active participant in curbing the threat of Climate Change.

On the international scene the United Nations Framework Convention on Climate Change, the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the Paris Agreement, 2015 are some of the legal instruments in place to facilitate Climate Change mitigation, adaptation and finance. 

Uganda is a party to all these treaties. A few days ago, the President assented to the National Climate Change Act to give these international instruments force of law in Uganda. 
 
Section 22 of the National Climate Change Act provides that the minister in charge of Climate Change matters, through regulations, may impose obligations relating to Climate Change. 

Under this Section, private entities shall be required to prepare a Climate Change mitigation and adaptation plan. 

In other jurisdictions, such obligations have included: contributing towards a climate change fund, adopting green technology, reduction in financing towards dirty energy and the like.  

Section 25 of the Act makes provision for legal action to be brought against an entity whose action or omission threatens or is likely to threaten efforts towards adaptation to or mitigation of climate change. The Section extends the right to bring such a legal action to even those who have not necessarily suffered personal injury. 

These two provisions have the net effect of moving climate change mitigation and adaptation from the realm of ‘merely’ Corporate Social Responsibility actions to that of legal obligations and corporate risk. The Act also makes Uganda an international leader of climate liability regulations for companies.

Under the Companies’ Act, the duties of directors include acting in good faith, in a manner that promotes the success of the business of the company. 

In spite of the difficulty this may present, the directors, ideally, are always to prefer the long-term consequences for the company over the short-term benefit for shareholders.  

In tandem with the provisions of the Act, these duties would require that the Board of a company seriously consider the matter of Climate Change and how it may affect the company business. 

Section 25 means that now litigation may be brought against companies if a party feels aggrieved that the actions or omissions of that company threaten efforts towards the mitigation of climate change.

There is already precedent for such litigation. Such litigation, whether successful or not, can have far reaching economic, reputational and human resource consequences for a company. Section 22 will require that companies evaluate their activities, policies and initiatives and determine how best these may align with climate change legislation and best practices. 

We have already seen  activists protesting the financing of the East African Crude Oil Pipeline, the World Bank cutting back on financing to up-stream oil projects and international energy companies rebranding to prepare for their transition to greener and smarter energy alternatives. More of this is can be expected. 

If however, the foregoing will not convince a hesitant Board, perhaps the increasing evidence of a business case for sustainability can. Marks and Spencer has for the last 15 years implemented a sustainability strategy that in 2015/2016 realised almost GBP 200 million in net benefits.

Mr Jonathan Kiwana is a senior associate at Bowmans Uganda (AF Mpanga Advocates)