Legal advice warns directors risk personal liability for breach of duty if they fail to properly consider the impact of climate change


Commissioner for Environmental Sustainability, Dr Gillian Sparkes, recently participated in a business roundtable to discuss a legal opinion by Noel Hutley SC. Hutley’s legal opinion, commissioned by The Centre for Policy Development and the Future Business Council, progresses matters of climate change in corporate law.

The legal opinion found that directors who don’t properly consider the material impacts of climate change on their business, risk personal liability for breach of duty. This analysis asserts that courts will take a dim view of directors who fail to perceive or respond adequately to foreseeable climate-related risks.

Roundtable moderator Sam Mostyn recently wrote ‘…… Hutley’s opinion confirms we now have little choice but to understand how important climate change and sustainability risks are for us personally and for our companies, and act accordingly. The question directors should be, and now are, asking themselves is not “should we be considering this at all” but “how do we make sure we’re doing this well enough?”’ (The Guardian, 4 November 2016).

Sam Hurley, Policy Director at the Centre for Policy Development’s Sustainable Economy Program, wrote: ‘…today’s challenges to business as usual are acute. The long foreseen economic and environmental impacts of a changing climate are intensifying. Legally, any excuse that prior uncertainty about the science or impacts of climate change may have previously afforded directors has expired.’ (The Conversation, 4 November 2016).

The opinion was released on Monday, 31 October.