Duty on regulators and decision makers to consider climate change when exercising statutory functions

The areas of law in which the issue of climate change arises is developing, including in novel ways.

It is expected the law will continue to evolve in the areas of negligence by corporations in carrying out activities that increase greenhouse gas emissions. Directors’ duties to consider climate change when making board decisions to finance, invest in or carry our projects that affect or have the potential to affect climate change will also develop.1

Two recent high profile cases in which the Courts have imposed a duty on regulators and decision makers to consider climate change when exercising their statutory duties and functions are outlined below.

Federal Environment Minister owes a duty of care to children

In Sharma by litigation representative Sister Marie Brigid Arthur v Minister for the Environment2 representative proceedings were commenced in the Federal Court of Australia by number of children3 seeking an interlocutory injunction to restrain an apprehended breach of the duty of care owed by the Federal Environment Minister to the children in exercising her power to (most likely) approve the Vickery coal mine extension project in northern New South Wales (Extension Project) under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

The children were successful in part of their case because the Federal Court held that the Environment Minister did owe the children a duty of care to not cause personal injury to them when deciding whether to approve or not approve the Extension Project however the Court found that the duty does not extend to property damage or economic loss.

In addition, the Court concluded that there was not a reasonable apprehension of a breach of the duty of care because the decision on the Vickery project had not been made.

The Court noted that the Minister now had a substantial amount of new information before her because of the proceedings and she is now aware that in deciding whether to approve the Extension Project, she must consider the importance of personal injury to the children as a mandatory relevant consideration.4

The Court concluded that it would be undesirable to pre-empt the Minister’s decision5 and that it would be appropriate to assess whether any breach of the duty of care should be restrained when it is known what the Minister proposes to do when she publishes her proposed decision.6

On 15 September 2021, the Federal Environment Minister approved the Extension Project.7 In her Statement of Reasons for Approval, the Federal Environment Minister stated that she had given the

issue of human safety arising from emissions of carbon dioxide into the Earth’s atmosphere “elevated weight in making my decision.”8

In the meantime, the Federal Minister appealed the Court’s decision which was heard in mid-October 2021. It is unknown when the Full Federal Court will deliver its judgment.

New South Wales Environment Protection Authority required to develop environmental quality instruments

Following the catastrophic bushfires in New South Wales in 2019 and 2020, an action group commenced proceedings in the NSW Land and Environment Court against the NSW Environment Protection Authority (EPA)9. The action group sought an order compelling the EPA to develop environmental quality objectives, guidelines and policies (collectively, instruments) addressing climate change and its causes and consequences, because of its statutory duty under section 9(1)(a) of the Protection of the Environment Administration Act 1991 (NSW) to “develop environmental quality objectives, guidelines and policies to ensure environment protection,”(PEA Act).

The action group argued that the duty extended to including ways that are “consistent with limiting global temperature rise to 1.5° Celsius above pre-industrial levels.10

The Chief Judge of the NSW Land Environment, Preston CJ held that the EPA had such a duty, and that the duty is ambulatory and will evolve over time in response to changes in threats to the environment.11

However, his Honour did not agree with the action group that the instruments must regulate and reduce direct and indirect greenhouse gas emissions consistent with limiting global temperature rise to 1.5°C above pre-industrial levels.12 Preston CJ held the specific content of the instruments is in the discretion of the EPA.13

The Court reviewed documents claimed by the EPA as meeting the statutory requirement, but the Court held that the EPA had not performed its duty.

In ordering the EPA to develop environmental quality instruments to ensure environment protection from climate change, no timeframe for completion of those instruments was specified by the Court.

Key takeaway

Directors must act now to identify, assess, manage, mitigate and report on the climate risks relevant to their business.

For businesses wanting growth that is more sustainable visit our ‘The Economic, Social and Governance Journey‘ page for practical tips and further insights.

1 The rapidly developing effect of climate change on directors’ duties has been the subject of a number all opinions provided by an eminent New South Wales senior counsel, Noel Hutley SC to The Centre for Policy Development since 2016. Mr Hutley SC’s latest supplementary memorandum of opinion dated 23 April 2021, which is a publicly available document, can be found at Microsoft Word – Further Supplementary Opinion.docx (cpd.org.au). It was issued before the Court decisions referred to in this article.
2 [2021] FCA 560.
3 Noel Hutley SC was the senior counsel acting for the children.
4 At [503].
5 At [508].
6 At [506].
7 The Federal Minister’s Statement of Reasons can be found in the link: a71d58ad-4cba-48b6-8dab-f3091fc31cd5 (environment.gov.au)
8 At [163].
9 Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority [2021] NSWLEC 92.
10 At [2], [70], [90].
11 At [66]-[68].
12 At [16] and [96].
13 At [16] and [97].

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