PORTUGAL Law and Practice Contributed by: Andreia Candeias Mousinho, Diogo Duarte Campos, João Marques Mendes and Raquel Freitas, PLMJ
8. Insurance 8.1 Environmental Insurance
Furthermore, failure to take climate risk and climate impact into account in financing decisions is consid- ered a violation of fiduciary duties. See 6.5 ESG Requirements . 9.2 Lender Protection The liability of financial institutions can only be safe- guarded contractually. Specifically in the case of the constitution of a mandatory financial guarantee (see 9.1 Financial Institutions/Lenders ), the limits of the financial institution’s liability will be stated in the terms of the bank guarantee. Civil damages recovery relating to claims for envi- ronmental damage may occur provided that private interests are damaged as a consequence of the event (causal link). Environmental assets are often private property or located on private property. Thus, the injured party may bring an action for damages based on civil liability whenever someone offends their rights or interests by damaging any component of the envi- ronment. In other words, the act committed by the agent is unlawful and, as such, raises civil liability if it violates another person’s subjective right – such as the right to property – or if it violates any legal pro- vision intended to protect the interests of others. In these cases, the agent is obliged to repair the damage resulting from the offence. 10. Civil Liability 10.1 Civil Claims Compensation is enforced in kind (eg, replacing injured specimens with new ones) or by paying the corresponding amount of money whenever the former is not feasible. The real damage thus assessed works as a limit on the eligible compensation, although sometimes – espe- cially when the unlawful act is not intentional – the judge is granted powers to reduce the compensation equitably, considering the degree of culpability of the agent, its economic situation and that of the injured party, as well as other circumstances of the case. This principle of equitability may also apply in cases where there are several agents: compensation is allocated
Environmental insurance is available in the Portuguese legal system. Regarding potentially harmful activities, it is mandatory to have a financial guarantee, which can be provided by taking out environmental responsi- bility insurance. This type of insurance usually covers multiple risks arising from pollutant discharges into an environmental asset due to the activity of the insured. Normally, insurers exclude damage caused by work- ers’ errors and intentional acts. However, IGAMAOT believes that these exclusions violate the law. There are currently several administrative offence cases on this subject, and the courts have yet to rule on the matter. As referred to in 6.1 Liability for Environmental Dam- age or Breaches of Environmental Law , liability falls upon the operator to which the activity that harmed the environment is attributed. Therefore, financial institutions or lenders are not, in principle, liable for the offences that the operator commits. Nevertheless, financial institutions and lenders should consider the provisions set out in the Climate Law. In fact, as far as sustainable financing is concerned, several guiding principles were laid down that should guide the financial policies, financial management, capitalisation support and borrowing of the state and of private entities. Examples include the principle of accountability and prudence, which is intended to incorporate climate risks in the valuation of assets and liabilities, and the principle of transparency, which promotes the disclosure of information regarding the impact of management and investment decisions by managers, investors and consumers. Lack of trans- parency or failure to share information is considered an improper sale, under the regulation of the market of financial instruments. 9. Lender Liability 9.1 Financial Institutions/Lenders
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