Companies will soon be legally liable for snubbing climate risks

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Show me the money

Corporations boast a long history of putting profit before people; some would say it’s a trait that’s etched into their DNA. And by people I don’t mean the sect of shareholders and directors collecting handsome pay packets. I mean ‘the rest of us’, who are still impacted by the sometimes-shoddy business practices of impersonal companies.

This has been the case since time immemorial; corporations have long held fiduciary duties that legally compel them to pursue profit-maximization strategies. We can picture a legion of board members shrugging in concert; “sorry, our hands are tied”.  Consequently, environmental and social policies have aimed at scraping over the regulatory bar without dropping that fistful of dollars.

Companies will be legally liable for lagging behind

A recent memorandum of opinion authored by NSW barristers Noel Hutley SC and Sebastian Hartford-Davis, however, should induce a nervous shiver down the spines of many company directors. The memorandum, commissioned by the Centre for Policy Development and the Future Business Council, concludes that directors will be legally liable for ignoring foreseeable climate-related risks where those risks may be material to the interests of the company. In other words, failing to properly consider and manage the risks of climate change is likely to land directors in hot (rising) water.

The risks faced by corporations are of two distinct types; the physical impacts of climate change and the risk inherent in Australia’s transition to a lower-carbon economy. The first will be particularly relevant for corporations operating in weather-sensitive industries such agriculture and natural resource-based tourism. The second type will have interesting implications for companies that may be struggling to make that transition from today’s fossil fuel-based economy to tomorrow’s greener economy.

Wind of change

The three biggest Australian polluters, all of them energy companies, don’t have plans to stop burning brown and black coal for decades yet. The recent closure of the Hazelwood power station, which has been churning out brown coal-fired electricity in Victoria’s Latrobe Valley for over fifty years, is a further harbinger of things to come. We are in an epoch of transition, where change is happening all around us. Companies must wake up, shape up and keep up, or they’ll soon find themselves left in Australia’s dust with the likes of Hazelwood.

Energy Locals works on the premise that the times they are a-changin. While three energy companies top the list of Australia’s worst polluters, we offset our carbon emissions to remain carbon neutral. Our generous 10c feed-in tariff for solar energy provides a financial incentive for residents to get on board with renewables and leave dirty energy behind. And, with 50 percent of our profits going back into the community, it’s safe to say we are not your typical company. But I’m sure you’ll be just fine with that.