Climate Action Network Australia, 30 July 2003

The Australian Climate Justice Program was launched today by the environmental group Climate Action Network Australia (CANA). Acting on CANA’s behalf, the law firm Maurice Blackburn Cashman (MBC) today notified the directors of selected Australian companies of the financial risks that climate change presents to their companies, and of their legal obligations to deal with those risks appropriately.

The notification has been delivered to companies that CANA has identified as major emitters and major facilitators of greenhouse gas emissions. This is the latest in a series of actions around the world that signal the rise of climate change legal initiatives as a means to deal with major greenhouse perpetrators.

“What we're seeing is an emerging area of climate litigation. As the impacts of climate change worsen, the number of potential plaintiffs, and the range of legal actions available to those plaintiffs, will undoubtedly increase,” said Dr. Peter Cashman, General Counsel of Maurice Blackburn Cashman which is a law firm specializing in class action product liability and industrial and commercial law, and known for taking on powerful companies on behalf of ordinary Australians.

The notice initiated today warns of the various financial risks (together referred to as Climate Risk) faced by corporations that fail to address climate change. Major emitters and facilitators are notified that they are particularly exposed to risks posed by regulation of greenhouse gases and “climate litigation”. Directors are then informed that it would be prudent for them to assess and, if necessary, address Climate Risk.

“This action means we’re closing the back door when it comes to directors pleading ignorance about climate change,” said Philip Freeman, a lawyer and the Legal Coordinator for CANA, which has 30 Australian member organizations and is in turn part of a global Climate Action Network which has members in more than 70 nations.

The notice poses questions about the fulfilment of directors’ duties that may be asked of directors who fail to deal with Climate Risk: Is it “reasonable” not to order an assessment of their company’s level of exposure? Are you sufficiently informed to make a sound “business judgement” on this matter? Is a failure to act on Climate Risk in the “best interests” of their company? These questions are pertinent as steps are taken in Australia and internationally to tighten corporate governance.

"After HIH and Enron, directors of large companies are in the spotlight more than ever,” said Dr. Cashman, “Their decisions directly affect the financial well-being of millions of Australians who own shares. Because climate change presents financial risks to the bottom-line their companies, prudence demands that they take action to assess and, if necessary, address those risks".

“We’re putting the ball in their court by telling directors about general Climate Risk,” said Freeman, “It’s up to directors to inform themselves of the specific risks posed to their enterprise.” In this context, a failure to take action may amount to a breach of directors’ duties. If the failure results in loss to their company, shareholders may be entitled to recover compensation from directors. Worse still, the directors may not be covered by their D&O (directors and officers) insurance policy.

Today’s action by CANA was the latest move from a global climate justice movement which is gathering momentum. In the USA, two legal actions have already been launched. July 14 saw the launch of the London-based international and collaborative Climate Justice Program, an unprecedented alliance of 70 environmental organisations, lawyers, academics and individuals in 29 countries, which seek enforcement of existing laws to hold the perpetrators of climate damage accountable and liable.

"There is global scientific consensus on climate change,” said Dr. Cashman, “Companies and governments that fail to recognise and act on climate change are more likely to end up in court. For example, the US government is already being sued on two fronts. One case is against the government's overseas finance corporation, and the other is against the US Environment Protection Authority."

“It’s time for Australian business people to pull their heads out of the sand,” said Freeman. “CANA is taking this action because Australians will benefit if corporations are proactive about Climate Risk. Early action will pay dividends to shareholders and the environment. Delay will cost us all dearly.”

In a related initiative, MBC also wrote on behalf of CANA to the directors of ASX200 corporations which are not major greenhouse emitters or facilitators, informing them that because climate change has implications for the operations of all Australian companies, it would be prudent to take steps now to protect their companies’ financial wellbeing.

For Interviews:

Philip Freeman, Legal Coordinator, Climate Action Network Australia (CANA): 0411 333 663 (mobile)
Dr. Peter Cashman, General Counsel, Maurice Blackburn Cashman: 02 9261 1488.

For More Information:

Adam Foster, Coordinator, CANA: 0407 227 633 (mobile)
Janice Wormworth, Communications Coordinator, CANA: 0439 649 359 (mobile)
Full CANA media briefing, letter, discussion paper & company list: www.cana.net.au/ACJP
Climate Justice Programme (global): http://www.climatelaw.org
US lawsuit on behalf of FOE and Greenpeace: http://www.climatelawsuit.org
Maurice Blackburn Cashman law firm: http://www.mauriceblackburncashman.com.au

View the original article online at www.cana.net.au/ACJP