Senior Environment Judge Brian Preston Tips Wave Of Climate Change Litigation

AFR - Michael Pelly

Prudent companies must account for their climate risk.AFP/NSW Rural Fire Service

Business should brace itself for the next wave of climate change litigation in which actions in consumer law and corporations law will come to the fore, says the chief judge of the NSW Land and Environment Court.
Justice Brian Preston says "the obligations of corporations and company directors are also being affected by climate change and the changing legal and policy framework to address climate change".
"The three broad channels through which climate change can affect the financial stability of a corporation are physical risks, liability risks and transition risks," he writes in a forthcoming special issue of The Australian Law Journal.
Justice Preston says "changes in policy, technology and physical risks could cause the value of a large range of assets to be reassessed".

Justice Brian Preston says "changes in policy, technology and physical risks could cause the value of a large range of assets to be reassessed". James Brickwood

"Companies and company directors may have obligations, such as the statutory duty of care and diligence under s 180(1) of the Corporations Act 2001 (Cth), to consider these climate-related risks for the company.
"Aspects of the duty of care and diligence may include consideration of the risks of: litigation, such as a company being sued in negligence for failing to foresee, mitigate or adapt to certain effects of climate change; approvals being declined or significantly delayed on environmental grounds and therefore that risks and costs associated with the project will increase; and current assets or future investments that are exposed to climate change declining in value and becoming stranded assets.
"The latter consideration is of particular relevance to investors and financiers who are considering lending money to a carbon-intensive project, such as a new coal mine or coal-fired power station, or directors of superannuation funds which are heavily weighted towards carbon intensive equities."

Managing risks
He said corporations had duties of disclosure to financiers, investors, shareholders and stock exchanges.

Martijn Wilder, a partner at law firm Baker McKenzie, predicts increased litigation around companies law. James Brickwood 

"In respect of the latter, the Australian Stock Exchange Guidance Notice 9 recommends that a 'listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks'."
He noted the Financial Stability Board's Taskforce on climate-related financial disclosures recommended that companies make climate-related financial disclosures to provide information to investors, insurers and other stakeholders.
Justice Preston offered that in other jurisdictions, "constitutions or statutes may provide for certain rights, such as a right to life or right to a healthy and clean environment" and that "such rights may provide a basis for climate change litigation".
In the same issue, guest editor Martijn Wilder, a partner at law firm Baker McKenzie, also predicts increased litigation around companies law.
"The past two years have seen dramatic developments in the legal and financial communities' understanding of what directors must disclose about climate risk, and how they must respond to those risks," Mr Wilder writes.
"Prudent companies must account for their climate risk – and take proactive measures to address it – regardless of whether the Australian government introduces more traditional legal obligations to do so."

Links

• How Climate Change Will Shape Environmental Law
• Doctrine of Public Trust
• The Public Trust Doctrine
• Climate Change, Coastal Hazards And The Public Trust Doctrine
• Company Directors To Face Penalties For Ignoring Climate Change
• What does the Dutch court ruling on climate targets mean for Australia?
• In Novel Tactic on Climate Change, Citizens Sue Their Governments
• Dr Jarrod Gilbert: Why Climate Denial Should Be A Criminal Offence
• Climate Change May Be Doubted by Some, But Now It’s the Law
• My Student Missed Class... To Sue The Government Over Climate Change
• Law Student Tackles NZ Govt On Climate Change
• Are Countries Legally Required To Protect Citizens From Climate Change?