[Akshaya Kamalnath is Associate Professor at ANU Law and Kate Ogg is Professor at ANU Law and an Australian Research Council Fellow.
This post is part of the IndiaCorpLaw Blog Symposium on ‘Corporate Law and Climate Change: Indian and Comparative Perspectives’.]
Climate change has become an important topic in corporate law with the discussion ranging from sustainability (the S in ESG) disclosures, and harder requirements that companies must comply with, to a consideration of the duties of directors regarding the climate change impacts of their companies. Thus far, relatively less focus has been placed on climate change litigation within corporate law discussions. By focusing on litigation, we move from ex ante regulation to ex post remedies. But litigation itself creates ex ante incentives for corporations (not just the one involved in the litigation) to prevent similar litigation. This is because litigation is costly both financially and reputationally. This blog post therefore argues that climate change litigation has corporate governance implications.
We focus on climate change strategic litigation against corporations in the Australian context. We discuss the procedural rules that enable climate change litigation in Australia (noting that not all countries have the same rules or litigation infrastructure) as well as the social, political and economic factors that facilitate the growth and development of this form of corporate accountability. While the focus is on Australia, climate change litigation is a burgeoning phenomenon in many jurisdictions and so this post will be of interest in India and elsewhere as well.
Climate Change as a Corporate Governance Imperative in Australia
Climate change is one of the most consequential issues of our time, and so too of corporate law since in many instances, corporate conduct is the cause of climate change impacts. In Australia, mandatory climate related financial disclosure (CRFD) requirements have been introduced in 2024 and are being phased in from 2025 onwards. There is a liability framework attached to the CRFD and the market regulator, Australian Securities and Investments Commission (ASIC), is responsible for administering compliance with these requirements. As Hanrahan has noted, the liability framework itself is quite complex and the liability standard is not as strict as in some other comparable liability standards, for instance, in defective disclosure in the prospectus.
While there has not been specific litigation that tests the CRFD, we have seen greenwashing litigation that relied on statements made by companies in response to the predecessor of the CRFD (voluntary taskforce on climate related financial disclosures or TCFD which was in play up to 2023).
ASIC has always played a strong enforcement role in Australia as compared to many other jurisdictions where shareholder litigation is dominant. In climate litigation, although ASIC has been involved in enforcement actions, other litigants less conventionally involved in corporate litigation have initiated court cases. It is important to highlight these actors not traditionally involved in corporate litigation because this points to litigants being motivated by achieving broader, systemic change as opposed to an individual outcome. Finally, although this post does not focus on climate litigation against government, there are insights about strategic litigation from that context, that might be useful to keep in mind in the corporate context.
Climate Change Litigation
Although this is not an empirical study, it is helpful to note the relevant climate litigation against corporations thus far, to glean insights about the social, political, and economic factors at play. There are eight cases of climate litigation against corporations in Australia. Four cases are brought by ASIC that can be classified as climate litigation, and the main issue at the heart of all these cases is greenwashing. There is interesting detail in these cases, but they will not be explored here in this post.
To glean the social, political, and economic factors at play, we will look at three cases brought by unconventional litigants (at least in the context of corporate law). The nature of the litigants itself and some other points regarding the outcomes of these cases are worth drawing attention to. The three cases and their outcomes are listed below.
1. ACCR v Santos Ltd. (2026): Although the judgement was in favour of the defendant, this case was seen as an important test case on climate disclosures.
2. McVeigh v Retail Employees Superannuation Pty Ltd (2020): This case resulted in a settlement.
3. Parents for Climate Action v Energy Australia (2024): This case resulted in a settlement and the company apologised to customers as part of the settlement.
In terms of parties, corporate law scholars might have some familiarity with ACCR because of its shareholder rights advocacy in the past. Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia [2016] FCAFC 80 is a familiar case in corporate law textbooks to make the point about the division of powers between management and shareholders. On the other hand, Parents for Climate Action is less familiar in corporate law. Their activity here signifies the entry of public interest groups bringing climate action against corporations. Mark McVeigh, the ecological landscaper, is also interesting. Along with climate change, another key issue of significance in corporate law today is the entry of young people as retail investors. They are often actively engaged on social issues and in this case, we see that the activism resulted in litigation. The apology from the company in the Parents for Climate Action case, which was part of the settlement between the parties, is significant because it goes beyond the usual compensation-oriented outcomes in shareholder litigation.
The Growth of Strategic Litigation
It is highly likely that there will be an increase in climate change litigation against corporations in the Australian context by individual litigants and not-for-profit organisations (both in Australian courts as well as transnational litigation led by Australian lawyers). Generally, there has been a growth in strategic litigation in Australia since the early 2010s facilitated by several political, legal and economic factors.
Two of the most significant factors have been changes to tax law that clarify that organisations whose primary purpose is advocacy can be recognised as charitable institutions and shifts in the culture of the philanthropic sector that emphasise the importance of social change philanthropy (funding charitable work that addresses the causes rather than the symptoms of social and environmental problems). These developments have supported the emergence and growth of social justice and human rights legal organisations that have the financial capacity to undertake or support strategic litigation. These organisations are not dependent on government funding, do not do high-volume work more typical of community legal centres and, while they sometimes draw on pro bono assistance from large commercial law firms, they have alternative resources available to act against corporations in circumstances where large commercial firms may have conflicts. Some of these organisations have a focus on corporate responsibility, the environment and climate change and some are already active in holding multinational corporations accountable for environmental damage.
Another important development is the growth in the social justice practices of plaintiff law firms. These firms have traditionally specialised in areas such as personal injury law, employment law and insurance law but have increasingly undertaken high-profile social justice cases against government and corporate defendants. This has been enabled by greater commitments in Australian law firms to pro bono work but also, in some contexts, class actions that are made viable through litigation funders.
Further, the paucity of human rights law in Australia (Australia does not have a constitutional bill of rights nor a federal human rights act) has prompted a high degree of creativity in social justice lawyering. Litigation against government that in other jurisdictions would be grounded in human rights causes of action has, in Australia, been argued on grounds such as duty of care. Unlike human rights law, these common law causes of action can be wielded against corporate defendants. Further, because human rights arguments are rarely justiciable before Australian courts, Australian lawyers have used alternative dispute forums, such as the Australian OECD National Contact Point, to make allegations against multinational companies for breaches of human rights and environmental obligations. While not formally litigation, when coupled with a well-developed advocacy and media strategy, such actions can prompt meaningful remedies for victims and encourage changes in corporate behaviour.
Conclusion
Along with climate change reporting obligations and ASIC enforcement actions, corporations should now also factor in climate change litigation which is fast-growing. This post has sought to draw attention to the social, political, and economic factors relevant to climate litigation – something that has not received attention in corporate law and governance discussions. While some insights from this post are generalisable beyond Australia, the institutional features might vary in each country.
– Akshaya Kamalnath & Kate Ogg