Public authority directors’ duties and climate change is a discussion paper from the Centre for Policy Development’s Sustainable Economy program on the legal obligations of public sector corporate boards and directors to consider climate-related risks.
It concludes that public authority directors duties are at least as stringent as the duties of private corporation directors.
It was written by Dr Arjuna Dibley, Sam Hurley and Joshua Sheppard, and forms part of Centre for Policy Development work on directors duties and climate risk.
Public authority directors duties and climate change is a discussion paper that examines the duties of public authority directors regarding climate risk
While the bar has been rising in the private sector, the responsibilities of directors in public sector authorities to consider climate in their decision making have attracted less attention.
However, like major companies, many public sector authorities play a critical role in our economy: they build and maintain infrastructure, oversee superannuation portfolios, provide insurance and manage water resources, among many other activities.
And just like private sector counterparts, many are likely to be subject to financial risks associated with climate change, not to mention reputational and other risks should they fail to take appropriate action
The paper finds that:
The Public authorities directors duties and climate change paper makes four recommendations.
These are:
These findings and recommendations were discussed and refined as part of a roundtable hosted by CPD, Minter Ellison and the Office of the Commissioner for Environmental Sustainability, Vitoria, which drew on insights from public sector board directors, governance experts and climate specialists.
The research which underpins the paper was developed in part through an internship program supported by Monash University’s Faculty of Law.
Centre for Policy Development work has explored the obligations of company directors in the private sector to respond to climate-related risks.
The highly influential Hutley-Hartford Davis legal opinion on climate risks, emphasised that directors who do not properly consider and disclose foreseeable climate-related risks could be held liable for breaching their legal duties.
This finding has been echoed by Australia’s financial and corporate regulators, including the Australian Securities and Investments Commission, whose Commissioner John Price told a Centre for Policy Development audience in 2018 that company directors should take a “proactive and probative” approach to climate risk.
