The 2016 Hutley opinion [PDF] is the first in a series of landmark legal opinions by Noel Hutley SC and Sebastian Hartford-Davis on the duties of company directors and climate change, commissioned by the Centre for Policy Development.
The 2016 Hutley opinion was provided by Noel Hutley SC and Sebastian Hartford-Davis on instruction from Sarah Barker and Maged Girgis of MinterEllison.
It was launched at a business roundtable in Melbourne on 21 October 2016 where participants discussed the opinion and its implications for boards and directors.
It is likely to be only a matter of time before we see litigation against a director who has failed to perceive, disclose or take steps in relation to a foreseeable climate-related risk that can be demonstrated to have caused harm to a company.– 2016 Hutley Opinion
It is likely to be only a matter of time before we see litigation against a director who has failed to perceive, disclose or take steps in relation to a foreseeable climate-related risk that can be demonstrated to have caused harm to a company.
– 2016 Hutley Opinion
The landmark 2016 Hutley Opinion found that company directors are permitted – and in some cases required – to consider climate change in their decision-making.
It was followed by supplementary opinions in 2019 and 2021 exploring the topic in greater depth
The 2016 Hutley opinion found that the bar for directors is rising as the links between social and environmental factors and financial risks and performance come into sharp focus.
It demonstrates that directors who fail to consider the impact of foreseeable climate change risks on their business properly could be held personally liable for breaching the duty of due care and diligence they owe to their companies.
Its key findings are:
The 2016 Hutley Opinion affirms that directors can take a wide range of considerations into account when deciding what is in the best interests of a company, rather than focusing solely on immediate shareholder value maximisation.
This includes climate risks and a range of other environmental, social and governance issues that influence the near and long-term performance of companies and of wider economy.
By exploring directors’ duties and sustainability through the prism of climate risk, it highlighted how crucial it is to elevate these issues to the boardroom level – and opened up conversation about the skills, tools and strategies directors and boards need to improve sustainability risk management and disclosure.
Encouraging and supporting directors to have proper regard to these issues is a key step towards ensures that business is geared towards creating sustainable, long-term value and building an economy that recognises the interrelated economic, social, human and environmental drivers of prosperity and wellbeing.
The 2016 Hutley Opinion was the subject of a roundtable discussion of more than 30 business leaders, fund managers, legal experts and regulators in Melbourne on 21 October 2016.
Participants heard from former Bank of England Executive Director Dr Paul Fisher, who highlighted international developments in how markets and regulators understand and respond to climate-related risks.
