Enea v. Former Board Members and D&O Insurers - Other

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In December 2023, Polish state-controlled energy company Enea filed a civil lawsuit against former board members and its directors and officers (D&O) liability insurers, seeking over PLN 656 million in damages over the failed Ostrołęka C coal-fired power plant project. The suit alleges that former board and supervisory board members breached their fiduciary duties by approving the high-risk coal investment in 2018, despite financial and climate-related warnings.

Enea’s decision to pursue the claim followed a 2021 audit by Poland’s Supreme Audit Office, which found failures in the company’s risk management and recommended accountability for the project’s losses. Shareholders formally approved the lawsuit in January 2024 with 87% support at an extraordinary general meeting.

The project had faced early opposition from minority shareholder ClientEarth, which initiated legal action in 2018 alleging the investment breached directors’ duties of due diligence. A 2019 court decision ruled the AGM resolution approving the plant invalid. The plant was eventually abandoned mid-construction in 2020, and Enea wrote off nearly PLN 1 billion.

The current lawsuit seeks to establish civil liability of both the individuals responsible for the decision and the insurers who provided cover under D&O policies. Legal commentators note that the case indirectly addresses directors’ duties in the context of climate-related financial risks, such as rising carbon prices, EU energy reforms, financing constraints, and competition from renewables.

This is one of the first climate-related damages actions against corporate board members in Poland and may have significant implications for corporate governance, fiduciary duty, and insurer liability in the context of the low-carbon transition.

Enea v. Former Board Members and D&O Insurers

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

A subsidy is a direct or indirect payment to individuals or businesses, typically provided as a government cash payment or a specific tax reduction.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

The processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is the idea that reasonable precautions should be taken to avoid causing harm to people, the environment, or society. It also involves identifying and mitigating risks before they occur.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Enea v. Former Board Members and D&O Insurers - Other

Policy instrument

Fossil fuel

Greenhouse gas

Economic sector

Finance