Directors fiduciary duties
What are Fiduciary Duties?
Under the Corporations Act 2001 (Cth) (Act), a director of a corporation must exercise their powers and discharge their duties:
- with the same care and diligence that a reasonable person would exercise in the corporations circumstances if they occupied the office held by that director (s180(1)); and
- in good faith in the best interests of the corporation (s181(1)(a)); and
Generally, the best interests of the corporation are represented by maximising financial performance. As result, it is not for the directors to infuse their own ethical considerations into decisions that it may lawfully make.
Having said this, the interests of the corporation can include the physical, political and regulatory environment in which it operates and so the Courts have held that directors can take these matters into account to the extent that they are linked with the interests of the corporation.
Risks
Historically, climate change was often regarded as an ethical issue for investors – a 'non-financial environmental externality' that was secondary to, and largely inconsistent with, the imperative to maximise financial returns. Recently, however, the question of climate change has transformed into one of assessing material financial risk.
More recently, the financial risks and opportunities presented by climate change have become a mainstream issue for the business community. Debates over 'stranded asset' exposures (eg the IMF, OECD, WorldBank) and asset divestitures play out in the financial press. Recognised economic and financial institutions warn of the significant economic consequences of climate change. And, globally, we are witnessing a surge in political and regulatory interventions in an attempt to deal with climate change and the resulting community concerns.
Adapting Portfolios to Climate Change | BlackRock
Implications and strategies for all investors
Investors can no longer ignore climate change. Some may question the science behind it, but all are faced with a swelling tide of climate-related regulations and technological disruption. Drawing on the insights of BlackRock’s investment professionals, we detail how investors can mitigate climate risks, exploit opportunities or have a positive impact. Climate-aware investing is possible without compromising on traditional goals of maximising investment returns, we conclude. We then reflect on steps that stakeholders in the climate debate are considering, including the use of carbon pricing as a cost-effective way to reduce emissions. Our overall conclusion: We believe all investors should incorporate climate change awareness into their investment processes. Read more
The Paris climate deal has come into force – what next for Australia? | The Conversation
Hazelwood to close as energy transition gathers pace in Australia | Renew Economy
Australian business woefully unprepared for climate change | SMH
Business leaders heed warning on climate change risks | The Australian
The nation’s top regulators, legal experts and leading company directors have backed a warning to listed company boards to factor climate-related business risks into their decision-making or risk breaching their duties under the Corporations Act. At a recent private meeting in Melbourne, more than 30 senior business leaders, fund managers, legal experts and regulators gathered to consider a new legal opinion by Noel Hutley SC on how corporate law requires company directors to consider and respond to climate-related risks to business.
Company directors to face penalties for ignoring climate change | SMH
2016 Climate Alliance National Conference - Summary
Summaries from each of the speakers are available on this page. Click on the link below to go to your chosen speaker's summary. To view conference photos, please click here.
Veteran UK banker Paul Fisher on climate change and the financial sector | The Saturday Paper
2016 Business Leadership Award Winners
State of the Climate 2016 | Bureau of Meteorology and CSIRO
Keep it in the ground: renewable energy breaks new records | The Guardian
Are global markets ready for Trump or another GFC? | Sydney Morning Herald
Coal-fired power stations: Senate committee to examine how best to close them | The Guardian
South Australia's blackout explained (and no, renewables aren't to blame) | The Guardian
Current emissions could already warm world to dangerous levels: study | The Conversation
SEC’s Exxon Probe: the ‘Tipping Point’ for Oil & Gas Climate Change Accounting? | Environmental Leader
ExxonMobil’s climate change accounting is under investigation by the US Securities and Exchange Commission — and this could have major implications for the oil and gas industry, the Wall Street Journal reports.
The SEC probe is focusing on how Exxon calculates its business risk from climate change, including the figures it uses to project future costs of complying with emissions regulations.