How do climate-related implications of obligations under the Companies Act 2006, particularly section 393, relate to the duties and powers of investment intermediaries?

Climate change creates business risks that can intersect with the duties that directors owe their companies, including the duty under section 393 of the Companies Act 2006 to approve accounts only if they provide a 'true and fair view' of the company’s financial position. Climate-related financial risk also affects investors and may therefore be relevant to the fiduciary duties that investment intermediaries owe to their clients or beneficiaries. The intersection between climate change, directors’ accounting-related duties, and investors’ fiduciary duties has practical implications for engagement between corporate boards, who approve accounts, and institutional investors, who are primary users of accounts. We begin this paper by describing how directors’ duties under the Companies Act 2006 can create climate-related obligations, and then outline investment intermediaries’ duties and powers. Next, we analyse whether investment intermediaries’ duties influence the way in which they can engage with companies on integrating sustainability into portfolio companies’ accounts. We argue that intermediaries’ duties do not require that they engage with companies to integrate climate-related matters into their accounts, but that they are permitted to do so. We conclude by suggesting practical implications for investment intermediaries seeking to ensure that portfolio companies integrate climate-related matters into their accounts.