In November 2023, Sherpa, supported by Harvest, the Center for Climate Crime Analysis (CCCA), Repórter Brasil and Transparency International, filed a complaint with the French National Prosecutor’s Office against four large French banks BNP Paribas, Crédit Agricole, BPCE, and Axa.
The complaint is calling for a criminal investigation to be instituted against the banks for money laundering. This relates to the banks' financing of Brazilian beef companies whose activities are alleged to be responsible for illegal deforestation, which would make profits derived from those activities the proceeds of crime.
This filing is as historic as it is precedent-setting. It is the first time a criminal complaint has been filed against a private institution, in this case, banks, based on the offences of laundering and receiving stolen goods, arising out of their financial support for activities responsible for deforestation, and the profits derived from that support.
The case is not a derivative action, but it considers similar types of risks and issues as we have considered in climate-related litigation. Consider this issue an update of our Directors & Climate Change release. Those lessons may now be applied to define biodiversity risks.
What this means is that Boards and officers must adopt a comprehensive and integrated approach to assessing biodiversity and climate-related risks. This newest action regardless of outcome, builds on the existing landscape of opinions on directors' role in managing climate risk and risk areas for organisations, that justifies the need to continuously sharpen board and officer focus on climate.
Even though litigation against directors may be unsuccessful and with it the risk of incurring personal liability as a result of a derivative claim, directors are advised to adopt a cautious approach and consider climate- and biodiversity-related risk for the following reasons:
- Litigation brings with it negative publicity
- Litigation is costly
- Litigation brings with it other related claims which expands the scope of the organisation's risk profile.
This latest filing which we will monitor as it unfolds, has the potential to be similarly influential in elevating consideration of nature-related risk to the forefront of directors' minds and to the top of board agendas.
MZIZI Africa sponsors the Zero Carbon Village, a network of lawyers and business leaders accelerating a just transition across Africa. The participants in the Governance Tribe work together to identify all governance, strategic and management areas that will enable organisations align themselves correctly to its net zero goals.
Comments ()