Event: What the ICJ advisory opinion on climate change means for corporate Australia
Leading climate law experts have authored a new joint opinion on what recent developments in international law mean for Australian fossil fuel producers and company directors.
Climate Integrity (my employer) is launching a new expert legal opinion on the implications of the International Court of Justice’s advisory opinion on climate for Australian company directors and climate risks.
The event will be held at the State Library of NSW, on the evening of 7 May, and I’d like to extend an invitation to readers of Tempests and Terwatts to attend.
Published last year, the ICJ Advisory Opinion was a landmark moment in international climate law. In a unanimous opinion, the ICJ concluded that countries had an obligation to prevent significant harm from being caused to the climate system. Failure to do so could amount to an ‘internationally wrongful act’ for which countries could be held responsible, potentially leading to an obligation to pay financial compensation to another State for damages caused by climate change.
The ICJ specifically called out the ongoing expansion and operation of fossil fuel industries as an example of what could amount to an ‘internationally wrongful act’. In a statement that challenges the long-term viability of continued fossil fuel use, the ICJ said:
“Failure of a State to take appropriate action to protect the climate system from GHG emissions — including through fossil fuel production, fossil fuel consumption, the granting of fossil fuel exploration licences or the provision of fossil fuel subsidies — may constitute an internationally wrongful act which is attributable to that State.”
Climate Integrity (my employer) commissioned three leading Australian barristers to answer the question: What implications does the ICJ Advisory Opinion on climate change have for Australian companies and directors’ duties?
The answer was provided in a comprehensive joint legal opinion, authored by Ruth Higgins SC, human rights law expert Jennifer Robinson, and climate law expert Zoe Bush.
You can read that joint opinion for yourself here: www.icjdirectorsdutiesopinion.org
The joint opinion finds that company directors, particularly those on the boards of Australia’s fossil fuel companies and emissions intensive industries, face heightened obligations to proactively assess and manage the risks that climate change poses to their business. Australia’s status as a signatory to the Paris Agreement and as a major producer of fossil fuels means Australian companies should anticipate stricter regulation of emissions in the future, and fossil fuel companies should be anticipating the likelihood that their business models face significant decline.
The joint opinion found:
“A corporation that generates revenue from the production and/or supply of fossil fuels is exposed to the risk that those profit-generating activities may be limited, prohibited or rendered financially unviable. A corporation with assets associated with fossil fuel extraction, production and/or supply is exposed to the risk that those assets will become stranded and give rise to significant decommissioning liabilities. In our view, directors of such corporations would be required in their decision-making processes to at least consider such risks.”
And:
“The [ICJ Advisory Opinion] has already precipitated legal and regulatory developments that create or amplify climate-related transition risks to which some Australian corporations, particularly those that derive revenue from fossil fuels or other emissions-intensive activities, are exposed … As the magnitude of those risks or the probability of their occurrence rises, so too may the standard of care expected of directors of those corporations.”
You can read the Australian Financial Review’s coverage of the joint opinion here.
Climate Integrity hopes the release of the joint legal opinion will help inform increased scrutiny of, and engagement with, Australia’s continued expansion of the fossil fuel industry, and how corporate Australia engages with the increasing expectation that it proactively prepares for a global phase-out of fossil fuels.
The event on 7 May should be an informative evening for anyone interested in climate law and how international and domestic law can intersect to amplify the risks imposed on major emitters and fossil producers. The event will hear from authors of the joint opinion, Jennifer Robinson and Zoe Bush, and will be chaired by leading international climate law expert, Fleur Ramsay.