In her inaugural lecture, Strik focuses on the question of how judges can assess the misleading nature of statements made by companies about their goals and plans to reduce greenhouse gas emissions in the future. She argues: "Case law shows that not only the process of producing published forward-looking information is assessed (i.e. procedural diligence), but also its content. This assessment is based on current and historical facts, the soundness of information systems, the methods used, developments known, foreseen and reasonably foreseeable at the time of publication, and the assumptions and reservations made."
Liability of companies and directors
Misleading climate reporting can lead to liability for the company and its directors. Strik: "It is clear that unjustified sugar-coating can cause serious problems for a company and its directors in court. This does not only apply to black-and-white situations in which company directors deliberately lie about climate targets and plans. In large organisations, there is also a liability risk due to, for example, inadequately functioning information systems, the involvement of many colleagues in the preparation of climate reporting due to delegation, the use of insufficiently accepted methods and incorrect assumptions. In practice, there is a danger of judging with hindsight. The legal risks of publishing forward-looking information are real."
Strik notes that Dutch rules on liability for forward-looking information in published reports are stricter than in the United States and certain other European countries. In the Netherlands, there is also uncertainty about the liability position of directors. "It is striking that the Dutch legislator has so far paid no attention to these liability risks, not even in the implementation of the European directive on sustainability reporting (CSRD). Legislators, regulators and courts have an important role to play in contributing to a climate in which companies and their directors dare to set a course towards greater transparency about climate ambitions, with confidence that they cannot be held liable at will."
Proposals to reduce legal uncertainty
How can transparency about climate ambitions and plans be promoted by reducing legal uncertainty for companies and their directors? The professor makes a number of proposals: "Firstly, the AFM could make more active use of its power to initiate annual accounts proceedings in order to elicit clarity about climate reporting concepts through the Enterprise Chamber. Following the Australian example, a temporary “private enforcement holiday” could also be introduced, during which directors cannot be held liable for climate reporting during a transitional period after the introduction of the CSRD. Companies can still be held liable during that period. This could also ensure that, during that important period, the focus remains on the issue at hand rather than on the individual responsible for climate reporting."
As a third proposal, Strik suggests introducing a 'safe harbour' arrangement, following the American and English example. This would place the burden of proof for all elements of liability for forward-looking information on the claimant, and a director could only be held liable if he or she had performed his or her duties in a seriously culpable manner. “Finally, it would be welcome if the Supreme Court were given the opportunity to provide clarity on important points of director liability for reporting that have long been the subject of debate among legal experts. Such a ruling could be prompted by a preliminary ruling procedure or an appeal in the interest of the law to be lodged with the Supreme Court by the Attorney General.”