ExpertsDirect ESG Litigation and Directors’ Duties
On Thursday 2 June 2022, ExpertsDirect hosted an ESG Litigation and Directors’ Duties Panel discussion at The Establishment, Sydney. The audience comprised plaintiff and defendant lawyers, experts, litigation funders and in-house legal counsel.
Guests enjoyed drinks, a three-course dinner and lively company while waiting for a hypothetical discussion with esteemed panellists Graham Bradley AM (Chairman, United Malt Group Limited and Volt Corporation Limited; Director, Shine Lawyers), Noel Hutley SC (Fifth Floor St James Hall) and Fiona McLeod AO SC (Owen Dixon Chambers West).
Between dinner and dessert, our panellists engaged in a spirited and insightful hypothetical discussion, moderated by Mark Smyth (Partner, Herbert Smith Freehills) concerning the duty of care and diligence of company directors in the context of the impacts of climate change. Drawing on their experiences in advising various actors in climate change litigation, our panellists were robust in advancing their views on the duty of care owed by both the state and corporations to protect individuals from the threat of climate change.
Our legal panellists Noel Hutley SC and Fiona McLeod SC discussed the need for directors to respond to climate change resulting from growing pressures from regulators, investors, and the community at large, in light of government inaction and a scientific consensus warning of the onset of climate change. Graham Bradley considered the hypothetical through his lens as a director, highlighting the difficulties that arise for company boards given the long-term and unpredictable risks of climate change and the dangers of expecting directors to have a crystal ball to foresee what might otherwise be viewed as unforeseeable material risks.
The panel fielded questions from the audience, delving into the question of causation, a significant hurdle that ESG claims must grapple with.
Establishing causation between corporate action resulting in greenhouse gas emissions and climate change is complex, and our panellists had differing views as to whether the solution to claims resulting from climate change is legal or regulatory in nature given longstanding government inaction. Noel Hutley SC and Fiona McLeod SC considered that while the problem ordinarily lay in the province of government, solutions could be fashioned in the Courts when the right case presented itself, as occurred with the law of negligence in the seminal case of Donoghue v Stevenson.
A countering view offered by Graham Bradley was that the judiciary ought not usurp the jurisdiction of the democratically-elected legislature and executive, but should instead provide certainty and consistency to directors with regard to their obligations, given the unenviable task facing the modern-day director in fully discharging duties and obligations.
The updated 2019 opinion of Noel Hutley SC and Sebastian Hartford-Davis of counsel on climate change and directors’ duties is available here.
The decision of the Full Court of the Federal Court of Australia’s in the Sharma litigation conducted by Noel Hutley SC and Equity Generation Lawyers is available here.
To read about the work of Fiona McLeod SC in representing Pabai Pabai and Guy Paul Kabai as lead applicants in a landmark climate change class action for Torres Strait Islanders, information is available here and here.