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Climate change litigation to continue, with focus on CSR
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Climate change litigation to continue, with focus on CSR

Ashurst

Australian courts will consider the risks of climate change to be foreseeable, thereby creating further responsibilities for companies and directors, according to one BigLaw firm.

Ashurst partner James Clarke said that several proceedings have already commenced in Australia with regard to climate change disclosures and company management. This trend, he said, is expected to continue.

“While there is an increasing understanding about associated obligations and liabilities, there remains a lack of detailed guidance for companies and directors in how to appropriately respond,” he said.

Australian courts will most likely consider that climate change risks are foreseeable, and that directors who fail to consider those risks may be liable for breaching their duties of care and diligence. At the same time, key regulators have increasingly strengthened their statements in relation to climate change risks.”

One wave of climate change litigation focuses on corporate decision making and disclosures, and the role of directors in those contexts, Mr Clarke continued.

“A separate wave presents a different risk and that is the litigation directed at challenging, on climate change-related grounds, government approvals associated with development of a project, typically relating to fossil fuel projects or projects with high carbon emissions."

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His fellow partners, John Briggs and Jeff Lynn, added that even though the re-election of the Morrison Government means that “significant new legal transitional risks” may not yet emerge at a federal level, it is still expected that individual states and territories may play an increased role in renewable energy and emissions reduction requirements.

"Companies and their directors must monitor these developments and ensure that their practices meet the increasingly well understood obligations," the pair said.

Climate change can have significant implications for the obligations of companies and their directors, they added, “even when it does not pose any direct physical risk to business activities”.

“Companies and their directors are expected to consider and understand climate change risks, and ensure they are disclosed and, where appropriate, mitigated.”

Australian regulators including ASIC and APRA are increasingly attuned to these obligations, and have been vocal in their focus and awareness of climate change and associated liability. However, regulators are not the only ones seeking to ensure that companies and their directors consider and respond to climate risks – climate change litigation is a growing global trend,” they concluded.

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Jerome Doraisamy

Jerome Doraisamy

Jerome Doraisamy is a senior writer for Lawyers Weekly and Wellness Daily at Momentum Media.

Jerome is an admitted solicitor in New South Wales and, prior to joining the team in early 2018, he worked in both commercial and governmental legal roles and has worked as a public speaker and consultant to law firms, universities and high schools across the country and internationally. He is also the author of The Wellness Doctrines self-help book series and is an adjunct lecturer at the University of Western Australia.

Jerome graduated from the University of Technology, Sydney with a Bachelor of Laws and Bachelor of Arts in Communication (Social Inquiry).

You can email Jerome at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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