Commercial Law Report: Climate Change Litigation in Australia

This report analyzes the article "A new era of climate change litigation in Australia?" by Andre Korbel, focusing on the implications of climate change for commercial law and corporate governance. The report examines how increasing global demands and stakeholder needs necessitate corporate compliance practices. The article highlights the growing attention from regulatory, judicial, and legal bodies towards environmental practices, specifically addressing the increasing responsibilities of companies to disclose climate change risks. It discusses the Intergovernmental Panel on Climate Change (IPCC), challenges in corporate decision-making, and recent commentaries from regulatory bodies like ASIC. The report emphasizes the potential for director liability for failing to consider climate change risks, as per the Corporations Act 2001 (Cth). It concludes that corporations must consider stakeholder interests, including environmental concerns, and that directors face stringent disciplinary actions for non-compliance.

Corporate law
Bachelor of Business Accounting

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Link for the article:
http://www.mondaq.com/australia/x/799502/Climate+Change/A+new+era+of+climate+chan
ge+litigation+in+Australia
With the increase globalisation and the increased demand to address the needs of the various
stakeholders, there has been placed a great need for the corporations to consider the corporate
compliance practices in their business functions (Miglani, Ahmed and Henry, 2015). The
following work is aimed at analysing the various aspects of the commercial law in the chosen
article by Andre Korbel, namely the “A new era of climate change litigation in Australia?”
The article is based on the various aspects of the director duties as affected by the recent
pronouncements of the regulatory bodies and impact of the same on the corporate
functioning. The significance of the article lies in the fact that there has been increased
attention drawn of the regulatory, judicial and legal bodies since the early 2018 towards the
healthy environmental practices.
The article is mainly focussed on increasing responsibilities of the companies towards the
disclosure of the climate change risks in response to the enhanced focus on the environmental
issues. The article sheds light on the climate change wave in the corporate climate of
Australia. The first section of the article highlights the Intergovernmental Panel on Climate
Change (IPCC) that focusses the attention of the regulatory authorities on the needs to pay
attention to climatic changes in Australia (Korbel, 2019). The article further highlights the
challenges that are being faced in the corporate decision-making and disclosures. Some of the
commentaries are further highlighted in the said article to enable understanding of the
increasing concerns of the regulatory bodies towards the climate change risks. Some of the
recent commentaries that are being highlighted are that of Mr Hutley SC on 29 March 2019,
stating that the company directors can be found personally liable for breaching to consider
climate change risks in future, Thus, the director duties and responsibilities of the
corporations of Australia are once again on radar.
In addition to the above, the article also includes the highlights of the report as prepared by
the Australian Securities and Investments Commission (ASIC), in which it accorded the
recommendations of the Taskforce for Climate-related Financial Disclosures for the
corporates to disclose the climate risk associated with the business in a clear and specific

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manner. Following this, the ASIC has suggested a revised Corporate Governance Principles
and Recommendations to be complied by the listed public companies in Australia from the
next year. Further, the article highlights that the said progress in the disclosure requirements
are on the lines of the recent litigations against the companies, significance of the issue of
climate change and the stepping stone" approach adopted by the ASIC to make the directors
responsible for the said compliance by corporates. The article highlights the environmental
concerns such as the proportion of CO2 emissions produced by the business enterprises,
particular weather events, global warming, coupled with the rapid developments in climate
change attribution research.
As a result, it can be stated that the director duties are likely to be further widened to
specifically include the climate risks disclosure as part of due diligence and care in corporate
conduct, the failure of which may lead the directors personally liable. As per the director
duties as listed in the Corporations Act, 2001 (Cth) in the Sections from 180 to Section 184,
the directors are responsible to ensure that the operations are conducted in a responsible
manner and he or she must take due diligence and care (Australian Securities and Investments
Commission, 2016). The term due diligence and care includes disclosing the risks that can
potentially influence the business operations and financial performance. As a result, physical
risks would be included in the said definition of risks and it is the duty of the board to
disclose the same to the various stakeholders and shareholders of the corporations. The article
finally concludes the outlook of the climate change litigation in Australia and the incident
impact on the duties of the directors and the reporting requirements of the corporates.
Thus, as per the discussions conducted in the previous parts, it can be concluded that a
corporate must responsibly discharge its business functions considering the interests of the
varied stakeholders which includes the environment and regulators as well. The recent
judgements in conjunction with the commentaries of the regulatory bodies have been placing
the said responsibility on the director’s shoulders’. The failure to abide by the same would
lead to stringent disciplinary actions against the directors of the companies.

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References
Australian Securities and Investments Commission (2016) Directors' key responsibilities
[online] Available from: https://asic.gov.au/for-business/your-business/tools-and-resources-
for-business-names-and-companies/asic-guide-for-small-business-directors/directors-key-
responsibilities/ [Accessed on: 16/04/2019].
Korbel, A. (2019) Australia: A new era of climate change litigation in Australia? [online]
Available from:
http://www.mondaq.com/australia/x/799502/Climate+Change/A+new+era+of+climate+chan
ge+litigation+in+Australia [Accessed on: 16/04/2019].
Miglani, S., Ahmed, K. and Henry, D. (2015) Voluntary corporate governance structure and
financial distress: Evidence from Australia. Journal of Contemporary Accounting &
Economics, 11(1), pp.18-30.

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