Roundtable | Directors duties and climate risk: on greenwashing



Skyscrapers shot from the ground up surrounded by mist - 2021 Hutley opinion header

The directors duties and climate risk roundtable was convened in December 2020 by the Centre for Policy Development.

The roundtable discussion connected senior legal experts, company directors, business leaders, union officials and public sector representatives.

It considered key climate-related challenges for boards and businesses, and priorities for delivering more proactive and ambitious responses. 

Directors duties and climate risk roundtable December 2020 downloads

Participants reflect on the directors duties and climate risk roundtable

The December 2020 roundtable on directors duties and climate risk examined critical challenges and flash points for directors and trustees seeking to meet their climate-related obligations.

Participants included Business Council of Australia president Tim Reed,  Citi chair Sam Mostyn, Australian Institute of Company Directors CEO Angus Armour, Australian Chamber of Commerce and Industry CEO James Pearson  and Australian Institute of Superannuation Trustees president Catherine Bolger.

The discussion, held under the Chatham House rule, was built around three hypothetical scenarios designed to tease out key legal and practical questions faced by company directors and other decision makers.

Conclusions of the December 2020 directors duties and climate risk roundtable

The following conclusions have been prepared by CPD and do not necessarily reflect the views of the participating individuals and institutions.

  • ‘Greenwashing’ on climate creates clear legal risks

Greenwashing can constitute misleading or deceptive conduct, including for organisations selectively disclosing their exposures or not taking credible steps to operationalise net zero commitments. Care needs to be taken to ensure that climate-related targets and analysis are rigorous, underpinned by appropriate governance, strategy and action, and reflected in financial statements as required

  • Superannuation funds can play a catalytic role in supporting the climate transition and should prepare for greater scrutiny of their climate-related governance and risk management

Recent developments, including the REST settlement, have highlighted the need to mainstream climate risks as a core focus of governance and risk management, especially as the investment risks and opportunities related to climate become increasingly dynamic and complex. As universal owners, superannuation funds have a major interest in supporting an economically and socially sustainable zero carbon transition.   

  • Industry-level collaborations on climate must consider the implications of competition law but, if properly managed, these issues should not impede collective action to address climate change

There is growing enthusiasm to collaborate across sectors and supply chains to develop and roll out low-emissions technology, and to design and deliver industry-level net zero pathways. In some circumstances, coordination between competitors, on climate as on other issues, may constitute cartel conduct, but exemptions and authorisations are available. Provided collaborative initiatives across industries and sectors are mindful of these provisions and proactively address them, competition law need not represent a major obstacle to collaboration on climate. 

Directors duties and climate risk roundtable informed the 2021 Hutley Opinion

The December 2020 directors duties and climate risk roundtable, in which Noel Hutley SC participated, informed the 2021 Hutley Opinion which Mr Hutley and Sebastian Hartford-Davis delivered in April 2021.

This opinion supplemented the earlier 2019 and 2016 Hutley opinions on directors duties and climate risk.