Why climate-related health risk is a corporate governance issue

As I write this, in mid-September 2026, Europe is emerging from a summer that reset the record books. West London hit 38.1°C in August, a new high for the year. Wildfires tore through England’s New Forest and across southern Europe. The Rhine and Danube fell to record lows, disrupting power generation and shipping and, in the UK, raising fears over crop losses and food supply.

Provisional figures put excess deaths across Europe from the summer’s run of heatwaves at more than 35,000, including at least 2,877 heat-related deaths in England from the May- June episodes alone. That toll, drawn from only around half the continent’s countries, is expected to rise further as more data is compiled. On top of which, forecasters are now warning of an active “flash-flood season” as autumn storms arrive on parched, drought hardened ground.

These are no longer once-in-a-generation events. For UK boards, across every sector, the implication is straightforward: extreme heat, drought and flooding are recurring, foreseeable risks to employees, customers, communities, supply chains and physical assets. That raises a question of corporate governance.

What are directors required to do about it?

Under the Companies Act 2006, directors owe a duty to promote the success of the company for the benefit of its members (s.172), and to exercise reasonable care, skill and diligence (s.174). Both duties require directors to identify the material risks facing the business and satisfy themselves that management has robust processes to manage them.

Climate-related physical risk is now squarely material: it threatens workforce health and productivity, disrupts supply chains and logistics, exposes occupiers and owners of poorly designed buildings to liability, and affects insurance and asset values. It also intersects with statutory duties under the Health and Safety at Work etc. Act 1974.

A board that delegates heat and weather risk to facilities or operations teams alone, rather than treating it as part of strategic risk oversight, is arguably falling short of the care and diligence the law expects – whatever sector the company sits in.

The obvious sectors are those facing physical constraints to their operations, such as construction, infrastructure and utilities but, in reality, the risk runs much wider.

Retailers and logistics operators face heat-stressed warehouses, fleets and last-mile delivery; food and agriculture businesses face crop failure and water stress; financial services and insurers face rising claims and stranded assets; manufacturers face plant shutdowns and worker safety issues; and hospitality, healthcare and education providers face vulnerable populations occupying overheating buildings.

Directors of any of these businesses should be asking management pointed questions about workforce welfare policies, business continuity planning and the resilience of buildings and supply chains – not waiting for a crisis to prompt the conversation.

Mandatory TCFD-aligned disclosure already applies to larger companies and financial institutions, and the direction of travel under the ISSB and UK Sustainability Reporting Standards is toward more granular reporting on what governance bodies are actually doing to assess and manage these risks. Many smaller companies with effective boards are voluntarily following suit. Expect extreme heat, drought and flooding to become a standing feature of sustainability reporting for businesses in every sector.

Climate litigation is a real and present threat

Boards should also track the growing wave of climate litigation, which increasingly treats climate risk as material and foreseeable, and directors’ response to it as part of their statutory s.172 and s.174 duties.

In ClientEarth v Shell’s Board of Directors (2023), the High Court found no prima facie case that Shell’s directors had breached their duties, but Mr Justice Trower accepted that weighing climate risk against a company’s many competing considerations is a “classic management decision” for the board. In other words, directors are expected by the courts to turn their minds to climate risk, weigh it seriously and be able to evidence that they have done so – including, increasingly, its physical and health-related dimensions, not just transition and emissions strategy.

The direction of travel is clear. Investors, regulators and the courts are converging on the view that climate risk – including the acute, human risk of extreme heat, drought and flooding – sits within, not alongside, directors’ existing fiduciary and care duties across every sector. Boards that can demonstrate active, evidenced oversight of these risks, from workforce safety to the resilience of their buildings and supply chains, are best placed to withstand both the events themselves and any future legal or regulatory scrutiny that follows them.