CORPORATE RESPONSIBILITY
Is the legal industry complicit in climate change? How Sharma has turned the heat up on lawyers’ responsibilities BRYNN O’BRIEN, EXECUTIVE DIRECTOR, AUSTRALASIAN CENTRE FOR CORPORATE RESPONSIBILITY
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ustralia is getting hotter. The continued buildup of carbon dioxide, methane and other greenhouse gases in the Earth’s atmosphere, due to human activities, primarily the extraction and burning of fossil fuels for energy, is driving global temperatures up. In April this year, carbon dioxide reached a critical record: at a concentration of 420 parts per million, we are halfway to a doubling of pre-industrial levels. The International Energy Agency told us in May this year that exploring for new fossil fuels in 2021 is fundamentally incompatible with a safe climate. From 8 July 2021, it is the law of the land in Australia that the Minister for the Environment: “has a duty to take reasonable care, in the exercise of her powers …to avoid causing personal injury or death to persons who were under 18 years of age and ordinarily resident in Australia at the time of the commencement of this proceeding arising from emissions of carbon dioxide into the Earth’s atmosphere.” (Sharma v Minister for the Environment [2021] FCA 774, per Bromberg J) The Sharma decision is indeed groundbreaking, but to anyone paying attention it cannot be a surprise. It comes as the harms of climate change become increasingly obvious, and more easily attributed to corporate emissions, and follows years of legal opinions on the theme of corporate and directors’ responsibilities for companies’ climate impacts. A 2019 opinion warned of the risk of litigation, which in the authors’ view was “increasing, probably exponentially, with time”. It is fair to say that this particular risk is now material for Australia’s corporate greenhouse polluters, in ways that may continue to take form. To put it another way, given the way Sharma illuminates the Minister’s duty, it is
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reasonable to entertain the prospect that there are other classes of persons and other classes of decision-makers to whom a similar relationship, and by extension duty, can be constructed. For example, does the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), Australia’s independent regulator for all offshore oil and gas operations, owe such a duty, and to whom? If NOPSEMA decision-makers fail to take into account and appropriately weigh the harm their licence-granting activities may have on children and future generations, have they acted unlawfully? Sharma will loom large in the practices of Australian lawyers advising companies that extract (or facilitate the extraction of) coal, oil and gas, for the immediate future. The decision has implications for project, asset and company valuation, and corresponding impacts on corporate disclosure obligations and directors’ duties. While the Minister has signalled her intention to appeal the decision to the Full Federal Court, companies will be reckoning with what is at stake for their businesses, and their lawyers will be advising them on how to deal with the precarity of planned fossil fuel projects. On one view, the common law, through the court, has seen fit to intervene to restore sense when the national political rhetoric and debate has become too removed from the reality of the science and its frightening predictions. The legal profession must now wrestle with the question of whether it has a duty, albeit a philosophical one, to follow the court’s lead. It is also time to grapple with some of the assumptions underpinning commercial legal practice. Commercial lawyers have, to a large extent, advanced the side of polluting industries. The Sharma case was run by a small firm, Equity Generation
Lawyers. The Minister was represented by the Australian Government Solicitor, while the solicitors on the record for Vickery Coal, a subsidiary of ASX-listed Whitehaven, were Ashurst. This dynamic is familiar in public interest litigation in Australia, especially where corporate interests are involved. A small firm, community legal centre or NGO represents David, and a top tier player represents Goliath. But in 2021, this power dynamic is increasingly anachronistic. The fossil fuels industry is often compared to the tobacco industry, and lawyers who protected the industry, despite the known harms of the product, have rightly been judged on their conduct. But this analogy has little relevance to the issue of climate change. Lawyers for the tobacco industry could avoid smoking cigarettes. They could represent an industry doing harm and not experience that harm themselves. To put it simply, the commercial legal industry has never been required to respond to systemic risk of the kind posed by climate change. None of us, not even big firm commercial lawyers, can escape its harms. Climate change, as I often remind myself, means everything changes. But for the arid regions of Australia, a lot of what it means is heat. The last time I was in South Australia, it was 48C. We crossed into South Australia on a day when the fire danger in the Flinders Ranges was described as “catastrophic”. We wandered around towns where more than a handful of shops displayed signs saying they were “closed due to heat”. Heat is familiar to South Australians. But apparently not that kind of heat, and not for such an extended period of time. As we pulled up in Port Pirie, it felt
