Barristers in Australia have warned company directors that it is ‘only a matter of time’ before one of them faces legal action for failing to consider and disclose risks posed to their business by climate change.
Senior Counsel Noel Hutley and Barrister Sebastian Hartford-Davis have issued a legal opinion which lays bare the risks posed to directors who do not consider and act on climate change risk under the Australian Corporations Act.
The opinion can be added to those of a growing number of legal experts who are highlighting directors’ duties around climate risk under existing legislation in Commonwealth countries.
This summer, ClientEarth issued a complaint to the Financial Reporting Council (FRC) in the UK on the omission of climate risk reporting in the annual reports of two oil and gas companies, SOCO International PLC and Cairn Energy PLC.
Alice Garton, a senior lawyer at ClientEarth said: “This is the latest clear example of the growing consensus around the duties of company directors to adequately assess and disclose the risk to their business posed by climate change.”
ClientEarth is part of the Commonwealth Climate and Law Initiative (CCLI), which is focused on Australia, Canada, South Africa and the UK. The CCLI is examining the current laws in place in these countries and what they mean for company directors.
Alice added: “With the Paris Agreement coming into force this Friday (November 4) company directors should be mindful of the fact that future regulation to curb emissions may further affect their business. They should be assessing and reporting on these risks to investors. If they don’t, they could well find themselves in hot water.”
ClientEarth is still waiting for a full response from the FRC to its complaint regarding SOCO International and Cairn Energy.