Calling all directors – don’t forget about your duty to the climate!

Having just recognised Earth Day on 22 April, the Osborn Law team wanted to promote environmental responsibility by reminding directors of their, often-overlooked, responsibility to the climate.

Under Australian law, directors have a duty to consider, disclose and respond to climate risks.

In recent years, we have seen climate-based litigation being brought against corporations for failing to provide such plans. This means there is a very real threat that failure to fulfil these duties will put a company at risk of regulatory action or litigation.

In November of 2020, Australia saw a landmark decision in McVeigh v Retail Employees Superannuation Trust (REST) where the standard was set for this duty. In this case, Mark McVeigh challenged that REST had not met their obligations under the Corporations Act 2001 (Cth) to consider the climate in their actions. While the Court held REST didn’t necessarily need to take action to any certain extent, they did, as an element of their duty of care and due diligence, at minimum, need to show that they had considered climate risks and how that could impact their assets.

As time goes on, we are seeing more and more legal commentary to this effect. General consensus is that as climate change intensifies and the duties, risks and opportunities relating to the climate become more understood, the level of director responsibility is increasing.

So, if you are a director and want 2022 to be the year your company makes the earth a priority, what are some things you can do? Start small by conserving electricity, turning off electronics, lights or climate control every night. Alternatively, you can opt for sustainable/recycled products to reduce your waste and minimise landfill.

Make 2022 the year of proactively reducing the impact your company has on the climate and, as a result, be confident in fulfilling your duty to the earth this Earth Day.