This article was written by Daisy Mallett, Will Heath, Sati Nagra and Lauren Taylor.
Recent political, legal and legislative developments mean that pressure on Australian companies to address climate risk has never been higher.
Independent MP Zali Steggall introduced the Climate Change (National Framework for Adaptation and Mitigation) Bill 2020 into Australian parliament today, which in light of US President-elect Joe Biden’s commitment to greater global climate ambition, will see renewed public interest on the issue of climate change policy and targets in Australia. While this debate continues, many business decision-makers’ attention is focussed on the courts, where an arguably more impactful trend is already emerging. Recent outcomes see momentum around climate change litigation building, and the implication is clear - where businesses do not reassess, disclose and act on revised understandings of climate change risk, they may be susceptible to litigation which is increasingly being used to catalyse climate action by governments and large businesses.
Recent climate change litigation trends
The appetite for climate change litigation remains strong despite global attention focussing on the emergency response to the COVID-19 pandemic. Climate change litigation continues to be widespread, with cases being filed across six continents in the last eighteen months. As we have noted previously, Australia continues to be a global destination for climate change litigation, being the second most active jurisdiction for such litigation after the United States.
Recent cases in Australia
Several landmark climate change cases have been issued across Australia in recent months, all of which have been brought by activists against government or government decision-making to compel action on climate change, including:
- April 2020: bushfire survivors in New South Wales (NSW) launched proceedings to compel the NSW Environmental Protection Authority to develop policies to regulate the State’s greenhouse gas emissions,
- May 2020: a youth advocacy group in Queensland launched Australia’s first human rights based challenge to a mining project to object to Waratah Coal’s Galilee Coal Project,
- July 2020: in a world first, a university student from Victoria sued the Australian Government for failing to disclose material climate change risks in sovereign bonds, and
- September 2020: a group of teenagers from across Australia brought an action via their litigation guardian to prevent the Australian Government from approving Whitehaven Coal’s Vickery Extension Project in NSW.
Climate change litigation is not solely aimed at forcing action from government, as corporations have also been subject to suits. Global trends over the last year indicate a growing focus on litigation against fossil fuel companies and the financial sector.
In Australia, recent litigation focusing on fossil fuel companies has largely targeted government decision-making on approving coal mine expansions or projects. Recent cases focusing on the financial sector include a complaint filed by bushfire survivors with the Australian National Contact Point for Responsible Business Conduct alleging a breach by ANZ Bank of the OECD Guidelines for Multinational Enterprises.
Latest development – McVeigh v REST
The latest development in Australian climate change litigation is the settlement in McVeigh v REST. The litigation was brought by a university student against his superannuation fund, Retail Employees Superannuation Pty Ltd (Rest), alleging a breach of corporate law and trustee obligations to adequately disclose climate risk in its investments. The case settled just last week, with Rest releasing a media statement detailing that “climate change is a material, direct and current financial risk to the superannuation fund” and committing to specific initiatives to manage and address the financial risks of climate change on behalf of its members.
Although such litigation to date has been focused on claims against companies, litigants and indeed regulators could equally seek to take action against directors and officers on the basis of specific obligations (e.g. continuous disclosure) and/ or general obligations (e.g. the statutory duty to act with reasonable care and diligence, as we have noted previously).
In the coming months we expect to see:
- increased climate change litigation globally, as climate change proponents try to prioritise the climate change agenda and as climate-related natural disasters continue to arise (e.g. the recent wildfires in North America). Joe Biden’s recent win in the US election will likely fuel that momentum in light of the most progressive pledges on climate change in US history, which include rejoining the Paris Agreement.
- increased Australian climate change litigation. Australia is a particularly fertile testing ground for public interest litigation on climate change, given its sophisticated and independent legal institutions, a government policy supporting carbon heavy industry, and the severe climate change impacts in the region. The recent recommendations of the Royal Commission into National Natural Disaster Arrangements may spur further activist litigation while the Climate Change (National Framework for Adaptation and Mitigation) Bill 2020, to be tabled before Parliament today, will likely inform Australian climate change litigation once passed.
- renewed focus by investment funds, including superannuation funds, as well as investment managers and advisers on the scope of their obligations to identify, mitigate and disclose the financial risks of climate change within their asset portfolios, particularly in light of the McVeigh v REST settlement.
 Between May 2019 – May 2020 climate change litigation was brought across six continents. Setzer J and Byrnes R, Global trends in climate change litigation: 2020 snapshot, Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy, London School of Economics and Political Science (2020) 1.
 Ibid 4.
 Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority (New South Wales Land and Environment Court, 2020/00106678).
 Youth Verdict and Bimblebox Alliance have both filed objections with the Queensland Land Court.
 Kathleen O’Donnell v Commonwealth of Australia & Ors (Federal Court, VID482/2020).
 Sharma & Ors v Minister for Environment (Commonwealth) (Federal Court, VID607/2020).
 Setzer J and Byrnes R (n 2).
 See, eg, objections by Youth Verdict and Bimblebox Alliance against Waratah Coal’s Galilee Coal Project (n 5); Sharma & Ors v Minister for Environment (Commonwealth) (Federal Court, VID607/2020) (n 7).
 Friends of the Earth Australia & Ors v Australia and New Zealand Banking Group (Complaint to the Australian National Contact Point, 30 January 2020).
 McVeigh v Retail Employees Superannuation Pty Ltd (Federal Court, NSD1333/2018).
 Rest, ‘Rest reaches settlement with Mark McVeigh’ (media statement, 2 November 2020)
 Royal Commission into National Natural Disaster Arrangements, Report (28 October 2020)