An Australian Federal Court class action lawsuit alleging that the Australian Federal Government failed to disclose to investors the climate change risks associated with the government’s sovereign bonds has survived in part an attempt by the government to have the action dismissed. In an October 8, 2021 Judgment (here), a Federal Court of Australia Judge “declined to strike-out” the applicant’s claim based on allegations of misleading or deceptive conduct, while agreeing with the government to “strike-out” others of the applicant’s claims, as discussed below. The court’s rulings in this case arguably represent something of a milestone in the development of climate change-related litigation.
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Climate Change
Climate Change as a “Systemic Risk”: Markets, Regulation, and Disclosure
If you have not yet seen SEC Commissioner Allison Herren Lee’s speech delivered last week to the PLI’s annual Institute on Securities Litigation, you should take a few minutes and read what she had to say. In her November 5, 2020 speech, which can be found here, Lee warns that climate change represents a “systemic risk” to markets, the financial system, and our economy. After noting that climate change presents an even greater risk of “grave human and economic costs” than we experienced in the pandemic — and urging that we should learn the lessons that the pandemic presents — she calls for a coordinated effort to create uniform climate change reporting and disclosure standards to ensure that investors and markets are better informed about the risks that climate change represents.
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Australian Government Sued Over Sovereign Bond Climate Change-Related Disclosures
In an interesting development that could prefigure further climate change-related disclosure litigation, an Australian investor has filed a lawsuit against the Australian Federal Government and two government officials, on her own behalf and on behalf of over investors in Australian Government Bonds, for allegedly failing to disclose to investors the climate change risks attached to the sovereign bonds. According to an August 12, 2020 memo from the Allens law firm (here), the suit is “a first-of-its-kind action worldwide,” one that could serve as a “stepping stone” toward both more activist litigation and more commercially focused climate change disclosure litigation.
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Guest Post: Climate Change Litigation Threats to Directors and Officers
As long time readers know, I have long been warning that climate change-related issues could have a significant impact on directors and officers liability exposures. In the following guest post, Francis Kean provides a summary outline of the specific litigation exposures that corporate directors and officers may face as a result of emerging climate change-related concerns. Francis is Executive Director FINEX Willis Towers Watson. Francis will be joining McGill and Partners in early spring 2020. I would like to thank Francis for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article.
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Court Rules Against NYAG in ExxonMobil Climate Change Disclosure Trial
In a lengthy and detailed post-trial opinion, New York (New York County) Supreme Court Justice Barry Ostrager has ruled that the New York Attorney General failed to establish that ExxonMobil Corporation made material misrepresentations in its public disclosures concerning how the company accounted for climate change risk. As discussed below, there are a number of interesting features to Justice Ostrager’s ruling. A copy of Justice Ostrager’s December 10, 2019 opinion can be found here.
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Securities Suit Arising From Climate Change-Caused Conditions Hits Utility
Once again, wildfires are raging across the length of California, from San Francisco to Los Angeles. Once again, the electricity transmission facilities of PG&E are thought to have caused or contributed to at least some of the wildfires. And once again, in the wake of the wildfires, shareholders have launched a securities class action lawsuit against company executives. As discussed below, the new lawsuit is the latest example of the way in which transformative changes arising from climate change can lead to directors’ and officers’ liability litigation.
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“Increasingly Likely” Climate Change Liability Risks
As I noted in a prior post, earlier this month I participated in a panel in a climate change liability event sponsored by Clyde & Co in collaboration with Willis Towers Watson as part of the Mayor of London’s Climate Action Week. In connection with the event, on July 11, 2019 the Clyde & Co law firm published an excellent, comprehensive paper on climate change developments and risks, entitled “Climate Change: Liability Risks for Businesses, Directors and Officers – The Coming Wave of Litigation” (here). This paper provides an overview of the challenges that businesses face as a result of climate change-related developments and of the potential areas of liability that may arise as a result of these developments.
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Thinking About the World Economic Forum’s Global Risks Report
The risk of extreme weather events resulting from climate change and the collective global failure to address climate change represent the most significant current global risks, according to the World Economic Forum’s annual survey of global risks. These kinds of risks represent significant concerns for human safety, social and business disruption, and property loss. As discussed below, and as recent claims have shown, these risks may present management liability concerns as well. The World Economic Forum’s January 15, 2019 Global Risks Report can be found here.
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Unless Checked, Climate Change Could Decimate U.S. Economy
Unless dramatic counter-measures are taken, annual losses to the U.S. economy from climate change could reach billions of dollars by the end of the century, according to a comprehensive interagency report from the U.S. federal government released last week. Even though the report’s subject arguably is outside this blog’s bailiwick, I am highlighting the report here out of a concern that due to the report’s publication late in the afternoon on the Friday of a holiday weekend many may have missed the report and its message. The report is sober, detailed, and serious, and should be read and studied by anyone concerned about important risks facing our national economy and business environment. The bottom line is that climate change clearly represents a significant risk for all enterprises, regardless of sector and of geographic location.
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NYAG Files Climate Change Disclosure Lawsuit Against Exxon Mobil
Alleged deficiencies in climate change-related disclosures have been a target of advocacy groups, shareholders, and regulators. The latest example of this phenomenon is the civil lawsuit the New York Attorney General filed on Wednesday against Exxon Mobil Corporation. The NYAG alleges that the company sought to “systematically and repeatedly deceive investors” about the future impacts climate change regulation could have on the company’s assets and value. The lawsuit underscores the fact that climate change disclosures are and will remain under scrutiny and that the claims alleging insufficient or deceptive climate change-related disclosures remain a significant area of corporate liability exposure. The October 24, 2018 complaint can be found here. The NYAG’s October 24, 2018 press release about the lawsuit can be found here.
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