Welcome to the August edition of Herbert Smith Freehills’ Australian ESG bulletin.
Our monthly ESG bulletin provides a targeted snapshot of key developments we see as reflecting the “must know” trends in the Australian market. In this edition, we spotlight the Australian Human Rights Commission’s recent guidance for senior leadership on the positive duty under the Sex Discrimination Act 1984 (Cth) to eliminate sexual harassment in the Australian workplace.
- In the spotlight: Guidance on complying with the positive duty to eliminate sexual harassment
- ACSI releases annual report on ASX200 climate disclosure trends
- Sustainability reporting: IAASB releases draft sustainability assurance standard and UK to release ISSB-aligned standards by 2024
- Traditional Owners partnering with renewable energy companies to develop, own, and operate renewable energy projects on Country
- WA government to repeal the new Aboriginal cultural heritage laws, just over a month after reforms commenced
- Greenwashing remains a fast-moving space; and brief updates on other climate litigation trends
In case you missed it… our virtual ESG-focused litigation conference in September
A unique opportunity to hear from a diverse panel of speakers who will provide their industry, corporate or legal perspectives on the most significant contentious ESG risk issues facing corporates operating in the APAC region.
The sessions include:
- ESG, corporate disclosure and the activist investor
- Rights and remedies: resolving disputes involving social and human rights issues
- The rise of ESG risks and practical tips on how to mitigate them from litigation and engagement perspectives
- ESG class action litigation in APAC: an international perspective
Recording coming soon.
December 2022 saw the Sex Discrimination Act 1984 (Cth) (SD Act) amended to introduce a positive duty requiring employers and persons conducting a business or undertaking to take reasonable and proportionate steps to eliminate (as far as possible) sexual harassment; sex discrimination and sex-based harassment; certain forms of victimisation; and the subjection of person to a hostile workplace on the grounds of sex, (the Positive Duty).
This month (August 2023), the Australian Human Rights Council (AHRC) published resource and guidance material on what the Positive Duty entails and what the AHRC considers is needed to comply with the Positive Duty.
As part of these materials, the AHRC’s Guidelines for Complying with the Positive Duty (2023) (Guidelines) make it clear that an organisation’s leadership, including the Board, have an active role to play in compliance with the Positive Duty, stating that ‘[s]enior leaders hold ultimate responsibility and accountability for the governance and legal compliance of their organisation or business’. The Guidelines also contain information about practical measures and steps which an organisation may take in order to meet the Leadership Standard, being one of the seven standards covered in the Guidelines. The examples set out in the Guidelines include leadership taking steps such as:
1. Maintaining an informed understanding of their obligations under the SD Act through:
- considering AHRC and other guidance material;
- learning about senior leaders’ duties through educational sessions; and
- monitoring best practice examples.
2. Having an active role in the development of a ‘prevention and response plan’ and implementation of that plan through:
- consultation with workers;
- consideration of data that assists in determining the effectiveness of implemented measures; and
- larger organisations introducing compliance with the Positive Duty as an ongoing item on the agenda for Board and other senior leaders’ meetings.
3. Setting the standard for respectful and inclusive workplace behaviour through:
- voicing their commitment to the elimination of the relevant unlawful conduct; and
- seeking out what can be learnt on this topic from relevant committees such as the Diversity and Inclusion committee and/or the Work, Health and Safety committee.
The expected approach is based on four key principles: Consultation (talking to workers about what they need), Gender equality (actions should be designed to achieving gender equality), Intersectionality (an intersectional approach recognises the heightened impact on different people), and Person-centred and trauma informed (such approaches address unlawful conduct, affirm safety and dignity, and support healing by genuinely considering an impacted person’s wishes and the impact that decisions may have on them).
The AHRC has indicated it will be using these guidelines to assess compliance. This AHRC guidance is timely as, from 12 December 2023, the AHRC will have statutory powers to undertake investigations and enforce the Positive Duty. We expect that these Guidelines will provide a useful yardstick against which to measure your organisation’s approach, as you continue to evolve your response to Positive Duty compliance.
Read more about the Guiding Principles and the Seven Standards identified in the Guidelines in our recent Employment Notes article.
On 10 August 2023, the Australian Council of Superannuation Investors (ACSI) released its Promises, Pathways & Performance report on public climate change disclosures made by ASX200 companies up to 31 March 2023.
Key statistics on progress include:
- 31% increase (to nearly 70% of ASX200 companies) in reporting against TCFD;
- 13% increase in net zero commitments;
- 26% increase in disclosure of medium-term (from 2026 – 2039) emissions reduction targets;
- 41% increase in the disclosure of a set carbon price used in investment and capital decision making; and
- 15% increase in disclosure of scenario analysis with 45% of companies using a 1.5°C or below 2°C Paris-aligned scenario.
ACSI also identified areas of focus as including only 22% of companies disclosing a Scope 3 emissions target and only 29% of companies disclosing an intention to initially reduce emissions through abatement before relying on offsets for residual emissions.
Sustainability reporting: IAASB releases draft sustainability assurance standard and UK to release ISSB-aligned standards by 2024
This month we have seen the continued harmonisation of sustainability-related reporting frameworks with:
- the International Auditing and Assurance Standards Board (IAASB) recently launching its proposed International Standard on Sustainability Assurance (ISSA) 5000 which is a principles-based global baseline for sustainability assurance. The international standard works with information prepared under various sustainability reporting frameworks (e.g. ISSB, GRI, ISO); and
- the UK government confirming that its sustainability disclosure standards (SDS) due for release by July 2024 will be predominantly based on the ISSB Standards released in June 2023 and will only diverge from this international framework “if absolutely necessary for UK-specific matters”. Unlike the proposed Australian reporting regime, it is intended that the UK would adopt both IFRS S1 (general requirements for sustainability related financial information) and IFRS S2 (climate related disclosures).
For more information see our recent blog posts below.
Traditional Owners partnering with renewable energy companies to develop, own, and operate renewable energy projects on Country
The Commonwealth and all State and Territory governments have agreed to co-design the First Nations Clean Energy Strategy, to facilitate opportunities for First Nations people to share in and benefit from the renewable energy transition. The strategy team are currently holding roundtables to inform the strategy’s development.
So far this year we are seeing a couple of examples of Traditional Owners partnering with renewable energy companies to develop and operate large-scale renewable energy projects on their Country. For example, in July 2023 the Yindjibarndi Aboriginal Corporation and ACEN announced their partnership. According to the partnership’s press release (here), the partnership agreement is to develop and operate renewable projects on the traditional country of the Yindjibarndi people in the Pilbara region. It includes principles ensuring Yindjibarndi approval of all proposed project sites on Yindjibarndi Ngurra, Yindjibarndi equity participation of 25- 50% in all projects, preferred contracting for Yindjibarndi-owned businesses, and training and employment opportunities for Yindjibarndi people.
WA Government to repeal the new Aboriginal cultural heritage laws, just over a month after reforms commenced
On 8 August 2023, the Western Australian Government formally announced it will repeal the new Aboriginal Cultural Heritage Act 2021 (WA), just over a month after it commenced. In our note below, Herbert Smith Freehills explains what the repeal legislation contains, implications for companies operating during the transition period and what might be on the horizon over the next year in this space.
Greenwashing attention and action have continued to accelerate this month. The key areas of regulator and activist concern look to be product and service offerings that misleadingly overstate sustainable or environmental benefits. A few of the latest developments include:
- a complaint made to the ACCC by Environmental Justice Australia which alleges that statements on VicForests’ website in relation to its ‘sustainable’ logging of forests are false and misleading within the meaning of ss 18 and 29 of the Australian Consumer Law;
- a Federal Court claim brought by Australian Parents for Climate Action (AP4CA) against EnergyAustralia in relation to allegedly misleading and deceptive claims that its ‘Go Neutral’ product is ‘carbon neutral’ and has a ‘positive impact on the environment’ due to its use of carbon offset credits; and
- another Federal Court claim brought by ASIC against Active Super for alleged misleading conduct and misrepresentations relating to claims it was an ethical and responsible superfund. Active Super represented on its website that it had:
- eliminated investments that posed too great a risk to the environment and the community (i.e. tobacco manufacturing and gambling); and
- added Russia to a list of excluded countries after its invasion of Ukraine.
Read ACCC Deputy Chair Catriona Lowe’s recent keynote speech at the General Counsel Summit here for more on ACCC expectations and strategies to avoid unintentional greenwashing.
… and brief updates on other climate litigation trends
Reports charting trends in climate change litigation were recently released by the United Nations Environment Programme (UNEP) in cooperation with the Sabin Centre for Climate Change Law at Columbia University and the Grantham Research Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy (available here and here).
The reports found that Australia has the second highest number of documented climate cases (the US having the highest number).
There have also been outcomes on two significant climate cases in Australia:
- O’Donnell v Commonwealth
Class action proceedings commenced by an applicant on behalf of other Australian Government bond holders against the Commonwealth Government have settled. The proceedings were commenced in 2020 and alleged that investor information statements and memoranda for Australian government bonds are misleading or deceptive because they do not disclose Australia’s climate change risk.
On 7 August 2023, orders were made by Justice Murphy which noted that a settlement has been reached in terms set out in a confidential Heads of Agreement and set a timetable for settlement approval, including a settlement approval hearing on October 11.
- Bushfire Survivors for Climate Action Incorporated v Narrabri Coal Operations Pty Ltd
The NSW Land and Environment Court dismissed an action by Bushfire Survivors for Climate Action seeking judicial review of the Independent Planning Commission’s (IPC) 2022 approval of the Narrabri Coal Mine Expansion.
The Bushfire Survivors had claimed that the IPC’s decision was invalid on the basis that it was “legally unreasonable” due to its impact on climate change.
The Court ruled the IPC’s decision was not legally unreasonable because:
- the IPC considered the public interest, namely by preparing a statement of reasons which adequately addressed the extension project’s impact on GHG emissions and climate change. The Court said that evidence on GHG emissions and climate change did not need to be given such weight that it would overwhelm any other legally relevant consideration – it was simply one form of evidence to be considered;
- the IPC had carefully considered all public submissions that it received, including the Interim Findings, as well as the community’s views; and
- the relevant State and national policies did not require immediate refusal of a development applications in relation to a coal mine which would contribute to GHG emissions or climate change. The IPC’s decision to grant such a development approval in those circumstances was within its power.
To hear more, register for our upcoming ESG conference
ESG thought leadership
To read more of our ESG thought leadership, please see:
- The Third Wheel Podcast Series: ESG in Australia
- Reporting for Duties: ESG Reporting in Australia
- ESG Notes and Climate Change Notes,
- ESG, Sustainability and Responsible Business offering
- Unlocking ESG Investment in Australia
|Written with assistance of Paige Mortimer (Environment, Planning & Communities), Zulema Townsend and Suzannah Hewson (Head Office Advisory Team), Georgia Gee (Disputes) and Darcy Moffat (Employment, Industrial Relations & Safety)
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