Prince Charles is taking part in a project to expose major polluting corporations based in Commonwealth nations to big-money legal action if they fail to accurately disclose their impact on climate change or reform their ways.

Along with lawyers and academics, the heir to the throne is lending his help to an initiative designed to publicise and develop nascent laws in Britain, Australia, South Africa and Canada which investors in polluting firms could use to drag directors through the courts.

A story of hope: the Guardian launches phase II of its climate change campaign Read more

The new initiative comes as world leaders prepare to travel to Paris on Monday to open crucial UN climate talks. Negotiators are expected to agree a deal that will cover carbon emissions beyond 2020.

The purpose of the prince’s project – the Commonwealth Climate and Law Initiative (CCLI) – is to illustrate to investors what they might do if companies are not frank with them about the damage they are inflicting on the world. The initiative will also lay out the risks in such behaviour to investors’ own future returns amid ever more significant government curbs on carbon emissions. By making investors more aware – and active – it is hoped that corporate behaviour will also change.

It is a relatively new area of law but last month the New York state attorney general issued subpoenas to Exxon and Peabody Energy, and began investigations over claims that they misled the public and investors about the dangers and potential business risks associated with climate change and their role in it.

Christiana Figueres: the woman tasked with saving the world from global warming Read more

In a speech in September the Bank of England governor, Mark Carney, warned company directors in the UK that they could be held legally liable for failing to manage climate change risks. He warned that those involved in the mining of fossil fuels, for example, would need to disclose to investors how greater government curbs on emissions would affect their future profitability.

The CCLI project is being launched on the first day of the Commonwealth heads of government meeting in Malta on Friday. The prince is attending and is expected to lobby leaders on the need for greater resolve on climate change.

Australia, Canada, South Africa, and the UK account for 13% of global coal reserves and 11% of global oil reserves. Their stock exchanges also have 27% of all listed fossil fuel reserves and 36% of listed fossil fuel resources, making them key parts of those countries’ economies.

The prince has been increasingly outspoken on the issue of climate change in recent days, saying in an interview with Sky News that drought exacerbated by climate change was one of the causes of the civil war in Syria.

On Thursday, he said in a speech in Malta that if international leaders failed to clinch a deal on climate change at talks in Paris next week, it could leave mankind facing a “perfect storm”.

He is providing his support for the initiative through his Accounting for Sustainability project, which he founded in 2004 to change corporate behaviour. Other partners on the project are the University of Oxford’s Smith School of Enterprise and the Environment (SSEE), and activist lawyers at ClientEarth, whose patrons include the band Coldplay.

Jessica Fries, executive chairman of Accounting for Sustainability, said that pension funds in particular would be wise to grill companies about their role in climate change and how future government regulation could affect returns. She warned firms that they would need to recognise the responsibilities they have to investors or face the consequences.

She said: “Climate change poses significant risks for pension funds and companies, in addition to that faced by society as a whole. Trustees and company directors need to ensure that they respond appropriately. A proper understanding of the legal and fiduciary responsibilities is key. This new initiative will explore the issues faced and help to develop a response.”

James Thornton, CEO of ClientEarth, said: “The days of treating climate change as a fringe concern are over and the potential for climate change litigation against companies or individual directors is growing. They urgently need clarity on their responsibilities, so this initiative is timely.”

Ben Caldecott, programme director at SSEE, said the project was necessary to educate company directors and promote better governance standards.

He said: “Company directors could be at risk of litigation if they mislead investors and the public about climate change. They may also face litigation for having contributed to anthropogenic climate change. This is a very new area, but one with potentially significant consequences. This new initiative will help investors to assess the materiality of these potential liabilities and inform best practice across Commonwealth common law countries.”