Climate change and corporate social responsibility: The intersection of corporate and environmental law

Environmental and Planning Law Journal

Volumn 24, Issue 4, 2007, Pages 253-280

  Bubna Litic, Karen ^a  

^a UNIVERSITY OF TECHNOLOGY SYDNEY   (Australia)

Author keywords

[No Author keywords available]

Indexed keywords

CLIMATE CHANGE; CORPORATE STRATEGY; ENVIRONMENTAL LEGISLATION; INDUSTRIAL PRACTICE; PLANNING PRACTICE;

AUSTRALASIA; AUSTRALIA;

EID: 37249050861     PISSN: 0813300X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (181)

1. Parliamentary Joint Committee on Corporations and Financial Services, Corporate Responsibility: Managing Risk and Creating Value (July 2006), http://www.aph.gov.au/senate/committee/corporations_ctte/ corporate_responsibility/report/index.htm (viewed 12 June 2007).
2. Corporations and Markets Advisory Committee (CAMAC), The Social Responsibility of Corporations (December 2006).
3. Brundtland G, Our Common Future (Oxford University Press, 1987), p 44.
4. Convention on Biological Diversity available at http://www.biodiv.org/doc/legal/cbd-en.pdf (viewed 12 June 2007).
5. United Nations Framework Convention on Climate Change available at http://unfccc.int/essential_background/convention/background/items/ 1349.ghp (viewed 12 June 2007).
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8. New South Wales v Commonwealth (2006) 81 ALJR 34; 156 IR 1; [2006] HCA 52 (14 November 2006).
9. Intergovernmental Agreement on the Environment available at http://www.deh.gov.au/esd/national/igae/ (viewed 12 June 2007).
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11. Intergovernmental Agreement on the Environment, [3.2] - [3.5].
12. Fisher, n 7 at 363.
13. Bates G, Environmental Law in Australia (6th ed, LexisNexis Butterworths, 2006), p 117.
14. Fisher, n 7 at 364.
15. Leatch v National Parks and Wildlife Service (1993) 81 LGERA 270.
16. Tuna Boat Owners Assn of SA Inc v Development Assessment Commission (2000) 110 LGERA 1; [2000] SASC 238 per Doyle CJ.
17. Fisher, n 7 at 364.
18. Gray v The Minister for Planning [2006] NSWLEC 720 at [100].
19. Gray v The Minister for Planning [2006] NSWLEC 720 at [125], [126] and [135].
20. http://www.wbcsd.ch (viewed 12 June 2007).
21. See Intergovernmental Agreement on the Environment.
22. Engaging Stakeholders Program was established by SustainAbility and the United Nations Environment Programme in 1995; Elkington J, Cannibals with Forks: The Triple Bottom Line of 21st Century Business (Capstone Publishing, 1998).
23. http://www.globalreporting.org (viewed 12 June 2007).
24. Global Reporting Initiative, G3 Sustainability Reporting Guidelines (2006).
25. SustainAbility, UNEP and Standard and Poor's, Tomorrow's Value: The Global Reporters 2006 Survey of Corporate Sustainability Reporting, http://www.sustainability.com/compass/ download_file.asp?articleid=196 (viewed 2 February 2007).
26. SustainAbility et al, n 25, p 1.
27. KPMG Global Sustainability Services, KPMG International Survey of Corporate Responsibility Reporting 2005, http://www.kpmg.com/ Industries/IM/Other/CRSurvey.htm (viewed 31 January 2007).
28. 52% of the Global 250 companies and 33% of the top 100 companies in 16 countries provide some form of CSR reports. 40% of these reports worldwide use the GRI guidelines.
29. Ernst & Young, Risk Management Series (5th ed, July 2005), p 3.
30. Vormedal I et al, Sustainability Reporting in Norway, Netherlands and Ireland: A Comparison (2006 paper given at the Greening of Industry Conference, July 2006, Cardiff).
31. Standards Australia, "Corporate Governance - Corporate Social Responsibility" (2003) AS 8003-2003.
32. Many years ago, Milton Friedman espoused the view that directors using corporate resources for broader environmental or social purposes is tantamount to mismanagement of shareholder funds: Friedman M, Capitalism and Freedom (University of Chicago Press, 1962)
33. cited in CAMAC, n 2, p 21.
34. Blair M and Stout L, "Specific Investment and Corporate Law" European Business Organisation Law Review (forthcoming)
35. as cited in CAMAC, n 2, p 24.
36. Revlon Inc v MacAndrews & Forbes Holdings Inc 506 A.2d 173 (1986).
37. Sustain Ability, The Changing Landscape of Liability: A Director's Guide to Trends in Corporate Environmental, Social and Economic Liability (2005), http:/www.sustainability.com/insight/ liability-article.asp?id=180 (viewed 29 January 2007), p 5.
38. Brennan Sir Gerard, "Law Vidues and Charity" (2002) 76 Australian Law Journal 492 at 497.
39. HIH Royal Commission Report, Vol 1 (April 2003), p 120.
40. American Law Institute (ALI), Principles of Corporate Governance, cl 2.01 (b)(3) referred to in CAMAC, n 2, p 39.
41. http://law.onecle.com/new-york/business-corporations/ BSC0202_202.html (viewed 2 February 2007).
42. UNEP Finance Initiative, Show Me the Money: Linking Environmental, Social and Governance Issues to Company Value (2006) http://www.unepfi.org/fileadmin/documents/show_me_the_money.pdf (viewed 1 February 2007). This report showed, across eight industry sectors, a direct link between attention to enviromnental, social and governance (ESG) issues, financial value and company profitability.
43. UNEP Finance Initiative, n 40.
44. The Dow Jones Sustainability Index was established in 1999 and the Ftse4Good was launched in July 2001.
45. KPMG Australia for the Investor Group on Climate Change, Carbon Disclosure Project Report 2006: Australia and New Zealand, http://www.cdproject.net/download.asp?file= CDP4_Australia_Report.pdf (viewed 18 January 2007).
46. SustainAbility et al, n 25, p 29.
47. Streetwize Communications, Annual Report 2005-2006, http://www.streetwize.com.au/ annual_reportstannual_report2006.pdf (viewed 12 June 2007).
48. This principle provides: "Even if corporate profit and shareholder gain are not thereby enhanced, the corporation, in the conduct of its business, may take into account ethical considerations that are reasonably regarded as appropriate to the responsible conduct of business".
49. CAMAC, n 2, p 53.
50. CAMAC, n 2, p 53.
51. Parliamentary Joint Committee on Corporations and Financial Services, n 1.
52. General requirements for disclosure in directors' reports.
53. Auditing Standard 212, Other Information in Documents Containing Audited Financial Reports (October 1995).
54. Mandatory disclosure of environmental performance required in the directors' report.
55. Auditing Standard 212 states, at 06: "Examples of other information include a report by management or the governing body on operations, financial summaries or highlights, employment data, planned capital expenditures, financial ratios, names of officers and directors and selected quarterly data."
56. KPMG Global Sustainability Services, n 27.
57. CAMAC, n 2, pp 145-146.
58. Global Reporting Initiative, n 24, p 41.
59. Coalition for Environmentally Responsible Economies (CERFS), The Global Framework for Climate Risk Disclosure (October 2006), http://www.ceres.org/pub/docs/Framework.pdf (viewed 2 February 2007).
60. See http://www.eia.org.au/files/PF5OGPZHO2/ SRI%20Benchmarking%20Report%202006%20EIA.pdf (viewed 27 June 2007)
61. The Social Investment Organisation, Canadian Social Investment Review 2004, http://www.socialinvestment.ca/SIReview04-orignal.pdf (viewed 12 June 2007).
62. See http://www.eia.org.au/files/PF5OGPZHO2/ SRI%20Benchmarking%20Report%202006%20EIA.pdf (viewed 27 June 2007).
63. This represents 36% growth since 2002. The 2006 European SRI Study (October 2006).
64. Whinnett E, "Big Parcel of Gunns Sold by Bank" Hobart Mercury (30 April 2004), pp 1-2.
65. Rainforest Action Network, What We Do: Citibank 2000-2004, http://www.ran.org/what we do/global finance/hist/citibank/ (viewed 12 June 2007).
66. Citigroup, Rainforest Action Network and Citigroup Announce Enhanced Citigroup Environmental Policy (News Release, 22 January 2004), http://www.citigroup.com/citigroup/environment/040122a.htm (viewed 12 June 2007).
67. Citigroup, n 64.
68. Rainforest Action Network, n 63.
69. Australian Stock Exchange Corporate Governing Council Principles of Good Corporate Governance and Good Practice Recommendations, Exposure Draft of Changes (November 2006), p 20.
70. Australian Stock Exchange Corporate Governing Council, n 67, p 20, Recommendation 3.1.2.
71. Australian Stock Exchange Corporate Governing Council, n 67, p 31.
72. Australian Stock Exchange Corporate Governing Council, n 67, p 32.
73. Greenhalgh v Arderne Cinemas Ltd [1950] 2 All ER 1120;
74. Ngurli Ltd v McCann (1953) 90 CLR 425.
75. Darvall v North Sydney Brick and Tile Co Ltd (No 2) (1989) 16 NSWLR 260; 15,ACLR 230.
76. Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil NL (1967) 121 CLR 483 at 493; 42 ALJR 123.
77. People's Department Stores Inc v Wise (2004) 244 DLR 564 at [42].
78. Section 180 states that directors and corporate officers must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise in the same position.
79. Section 181 states that directors and corporate officers must exercise their powers and discharge their duties in good faith and in the best interests of the corporation, and also for a proper purpose.
80. Australian Securities and Investments Commission v Vines (2005) 55 ACSR 617; [2005] NSWSC 738.
81. Austin RP, Ford HAJ and Ramsay I, Company Directors: Principles of Law and Corporate Governance (LexisNexis Butterworths, 2005).
82. Australian Securities and Investments Commission v Adler (2002) 168 FLR 253; 41 ACSR 72; [2002] NSWSC 171.
83. Bielefeld S, Higginson S, Jackson J and Ricketts A, "Directors' Duties to the Company and Minority Shareholder Environmental Activism" (2004) 23 Company and Securities Law Journal 28.
84. Ford HAJ, Austin RP and Ramsay IM, Ford's Principles of Corporations Law (10th ed, Butterworths, 2001), p 323.
85. Protection of the Environment Operations Act 1997 (NSW), s 169(1)(c).
86. Also, see R v Bata Industries Ltd (1992) 70 CCC (3rd) 394 where the Canadian Court set out what a director would need to do to satisfy the due diligence defence.
87. Australian Securities and Investments Commission v Adler (2002) 168 FLR 253; 41 ACSR 72; [2002] NSWSC 171 at [453].
88. This was in relation to the statutory duty under s 180 of the Corporations Act 2001 (Cth).
89. Section 124(3) of the Corporations Act 2001 (Cth) provides that for the avoidance of doubt, this section does not: (a) authorise a company to do an act that is prohibited by a law of a State or Territory.
90. Bielefield et al, n 80, p 39.
91. The argument here is that ensuring companies comply with the law is acting in the best interests of the company.
92. There is a proposed amendment to cut out this trigger. If this should happen, then the trigger would be members with at least 5% of the vote.
93. http://www.wilderness.org.au (viewed 12 June 2007).
94. The vote for the resolution with North Ltd was 6%; Commonwealth Bank 23% and National Australia Bank 22%.
95. Support for this can be found in the UNEP Financial Initiative report, n 40, which shows a verifiable link between the inclusion of environmental, social and governance (ESG) factors into a company's strategy and the financial success of the company.
96. Bielefield et al, n 80, p 38.
97. KPMG Australia for the Investor Group on Climate Change, n 43, p 17.
98. New Zealand company PGG Wrightson are breeding grass plants with a high C:N ratio that will reduce the production of methane gas by grazing ruminants. Similarly Fosters Group, in light of the potential of reduced water supply, has upgraded their Queensland brewery with a water recycling plant, doubling capacity with little additional water used.
99. Bielefield et al, n 80, p 39.
100. Bubna-Litic K, "Compliance and Enforcement of Mandatory Provisions: Is There a Future?" (paper presented at the 4th IUCN International Academy of Environmental Law Colloquium, Compliance-and Enforcement, October 2006, New York).
101. Although the latest research by the author on the mandatory reporting requirement found that 20% of the top 100 Australian companies in 2004 described the importance of the role of the board in integrating environmental issues into their decision-making. This was up from 3% from the 2002 results. See Bubna-Litic, n 95, p 7.
102. Bubna-Litic, n 95, p 7.
103. Statoil is the Norwegian state-owned oil and gas company, engaged in oil exploration and production in 15 countries.
104. Storebrand is Norway's largest insurance company and its three business areas are life insurance, banking and asset management.
105. GRIP (the Norwegian Foundation for Sustainable Consumption and Production) is funded 50% by the Ministry for the Environment, as an enabling agent on sustainable production and consumption for business.
106. SustainAbility et al, n 25.
107. SustainAbility et al, n 25, pp 6-7.
108. The 10 future trends identified in relation to corporate reporting are: 1) one-way passive communication to multiway active dialogue; 2) verification as standard; 3) single company progress reporting to benchmarkability; 4) management systems to lifecycles; 5) inputs and outputs to impacts and outcomes; 6) ad hoc operating standards to global operating standards; 7) PR to corporate governance; 8) voluntary to mandatory reporting; 9) boundaries set by companies to boundaries set by stakeholders; 10) environmental reporting to sustainability reporting.
109. Bubna-Litic K and de Leeuw L, The Thin Green Line: 1999 Annual Reporting of Section 299(1)(f) Environmental Reporting (Faculty of Law UTS, 2000, ISBN 1863655832);
110. Bubna-Litic K, and Willamson I, "The Thin Green Line: Embedded? 2002 Annual Environmental Reporting Under s 299(1)(f) of the Corporations Law" (2004) 21 EPLJ 466;
111. Jelstad J and Gjolberg M, Corporate Social Responsibility in Norway: An Assessment of Sustainability Reporting by Major Firm in 2003 (University of Oslo, ProSus, 2005);
112. Ruud A, Jelstad J, Ehrenclou K and Vormedal I, Corporate Responsibility Reporting in Norway: An Assessment of the 100 Largest Firms (University of Oslo, ProSus, 2005), http://www.prosus.uio.no/publikasjoner/Rapporter/2005-9/ rapp9.pdf viewed 12 June 2007).
113. "In 1999, 71% of companies reported under s 299(1)(f). In 2002 the result was 89% and in 2004, 95%.
114. Similar to s 299(1)(f) of the Corporations Act 2001 (Cth).
115. NCC Construction Norway AS is a wholly-owned subsidiary of the Swedish company NCC AB and is one of the five largest construction companies in Norway.
116. Kemira Chemicals produces chemicals for water treatment and pulp and paper industries.
117. HAG is an office chair manufacturer.
118. Category four includes comprehensive details of positive environmental activities. Category five includes category four information with the addition of details of non-compliance or recognition by the company that even if there has been no non-compliance with regulation, there may still be negative impacts from a company's activities. Category six contains category five information plus a mention elsewhere in the Annual Report or in a separate report, referred to in the director's report.
119. Australian Accounting Standard AASB 137 to apply from 1 January 2005, implementing International Accounting Standard IASB 37.
120. Auditing Standard 212, Other Information in Documents Containing Audited Financial Reports (October 1995).
121. See n 53.
122. Companies and Securities Advisory Committee, Report of an Enhanced Statutory Disclosure System (1991), pp 9-10;
123. see also Blair M, "The Debate Over Mandatory Corporate Disclosure Rules" (1992) 15(1) UNSWLJ 177;
124. see also Australian Securities Commission, Enhanced Statutory Disclosure System: A Response to the Companies and Securities Advisory Committee Report (1992), p 8.
125. For unlisted disclosing entities, s 675 the Corporations Act specifies the disclosure obligations and the Australian Securities and Investments Commission has responsibility for monitoring compliance with and enforcement of these statutory obligations.
126. Redmond P, Companies and Securities Law Commentary and Materials (Law Book Co, 2005), Ch 11.
127. Disclosure was on 19 October 2006.
128. http://www.cdproject.net (viewed 12 June 2007).
129. Bubna-Litic, n 95.
130. Australian Stock Exchange Listing Rules, r 4.10.17.
131. Guidance Note 10 of the Australian Stock Exchange Listing Rules.
132. Australian Stock Exchange Corporate Governance Council, Consultation Paper, Review of the Principles of Good Corporate Governance and Best Practice Recommendations (November 2006).
133. Australian Stock Exchange Corporate Governance Council, Principles of Good Corporate Governance and Best Practice Recommendations, Principle 7.
134. United States Securities and Exchange Commission, regs S-K, Items 101, 103 and 303.
135. United Stated Securities and Exchange Commission reg 240.12b-2.
136. CAMAC, n 2, p 126.
137. United States Securities and Exchange Commission, regs S-K, Item 303, para (3)(ii).
138. EU Accounts Modernisation Directive (June 2003) for financial years commencing January 2005.
139. Nouvelle Regulations Economiques (No 2001-420).
140. Energy Information Administration (EIA) country analysis briefs, http://www.eia.doe.gov/emeu/cabs (viewed 12 December 2006).
141. Entreprises pour l'Environment, Entreprises et Collectivities Partenaires pour l'Environment and Observatoire sur la Responsabilite Societale des Entreprises, Critical Review of How Companies are Applying French Legislation on Social and Environmental Reporting, http://www.orse.org/site2/maj/phototheque/photos/docs_an/ critical_review....pdf, p 12 (viewed 6 February 2007).
142. Entreprises pour l'Environment et al, n 131, p 45.
143. Entreprises pour l'Environment et al, n 131, p 45.
144. Entreprises pour l'Environment et al, n 131, p 48.
145. Entreprises pour l'Environment et al, n 131, p 48.
146. Entreprises pour l'Environment et al, n 131, p 49.
147. Entreprises pour l'Environment et al, n 131, p 49.
148. Entreprises pour l'Environment et al, n 131, p 54.
149. March 2005.
150. CAMAC, n 2, p 145.
151. Though I would argue that this is more to do with the lack of guidance on what information would be useful to report under s 299(1)(f).
152. Standards Australia, Corporate Governance-Corporate Social Responsibility (2003) AS 8003-2003.
153. Commonwealth of Australia, Department of Environment and Heritage, Triple Bottom Line Reporting in Australia: A Guide to Reporting Against Environmental Indicators (June 2003),
154. http://www.environment.goy.au/settlements/industry/finance publications/indicators/pubs/indicators.pdf (viewed 12 June 2007).
155. OECD Guidelines for Multinational Enterprises, http://www.environment.gov.au/content/text.asp?areaid=9 (viewed 12 June 2007).
156. Melbourne is the only Australian city participating in the program.
157. As at 7-January 2007: United Nations Global Compact, http://www.globalcompact.org (viewed 12 June 2007).
158. UNEP Finance Initiative, http://www.unepfi.org (viewed 12 June 2007).
159. These are Westpac, VicSuper, Savings and Loans Credit Union (SA), QBE Insurance Group, NAB, Medibank Private, mecu, IAG, ANZ.
160. Out of 56 in total, 10 are Australian
161. Out of 52 in total, four am Australian
162. Out of 34 in total, five are Australian
163. Principles for Responsible Investment, Signatories to the Principles for Responsible Investment, http://www.unpri.org/ signatories/#im (viewed 12 June 2007).
164. http://www.bsr.org (viewed 12 June 2007).
165. http://www.ceres.org (viewed 12 June 2007).
166. http://www.equator-principles.com (viewed 12 June 2007).
167. http://www.responsiblecare.org (viewed 12 June 2007),
168. See de Leeuw L, Bubna-Litic K and Genoff R, Implementing the Green Advantage in Small and Medium Sized Enterprises (City of Playford Council Report, October 2001).
169. United Kingdom, HM Treasury, Stern Review: The Economics of Climate Change, http://www.hm-treasury.gov.uk/independent_reviews/ stern_review_economics_climate_change/stern_review_report.cfm (viewed 17 January 2007).
170. United Kingdom, HM Treasury, Stern Review: The Economics of Climate Change, "Executive Summary", http://www.hm-treasury.gov.uk/independent_reviews/ stern_review_economics_climate_change/stern_review_report.cfm (viewed 17 January 2007), p i.
171. United Kingdom, HM Treasury, n 159, p xxvii.
172. United Kingdom, HM Treasury, n 159, p x.
173. United Kingdom, HM Treasury, n 159, p xxi.
174. United Kingdom, HM Treasury, n 159, p xxii.
175. United Kingdom, HM Treasury, n 159, p xxv.
176. "The Right Climate for Hot Money", Australian Financial Review (17 June 2006).
177. This was established in July 2005 with the United States, China, India, Japan and South Korea.
178. KPMG Australia for the Investor Group on Climate Change, n 43, p 27.
179. COAG Greenhouse and Energy Reporting Group, A National System for Streamlined Greenhouse and Energy Reporting by Business: Draft Regulation Impact Statement (October 2006), http://www.greenhouse.gov.au/reporting/pubs/ris.pdf (viewed 12 June 2007).
180. COAG Greenhouse and Energy Reporting Group, n 168, p 28.
181. Climate Change and Emissions Reductions Bill 2006 (SA) introduced into the South Australian parliament on 6 December 2006.