Climate Change

Climate change is a critical challenge for organisations.

The effects are causing significant shifts in corporate strategy and compliance management.

The Paris target of limiting warming to 1.5 degrees represents the 'north star' for these shifts, but organisations face the challenge of fragmented domestic implementation of this international target.

Alongside this challenge, the regulatory response to climate change also presents significant opportunities, with new markets and technologies developing as part of the transition towards a lower carbon economy.

How we can help

Climate-related legal risks come in different forms, encompassing climate litigation, corporate governance, shareholder action, project approvals and more. Gone are the days where legal advice was only needed to comply with greenhouse gas reporting and offsetting obligations.
Managing the transition to net zero calls for multidisciplinary teams of advisers who are both technically excellent in their fields and also keenly attuned to the evolution of stakeholder expectations on climate change. 
No one lawyer can cover the field. Our climate change advisers span a range of key legal disciplines and provide strategic guidance to help you stay ahead of the curve.  We work to safeguard your business by tackling regulatory shifts and compliance challenges, and providing advice to help you unlock the unique opportunities that the shift to net zero will bring. 
Allens is firmly committed to standing with you as you face the challenges presented by climate mitigation and adaptation imperatives.   
Governance and disclosure

Keeping clean on climate risk

Despite the absence of formal regulatory reform, the scope of directors’ duties requirements in relation to climate risk is rapidly evolving.

To stay in front of this trend, boards need to ensure that they are drawing upon the most up-to-date techniques for translating a complex series of inputs into financial risks and opportunities, and demonstrating the reasonableness of decisions made in light of these risks. Recent ASIC, APRA and ASX guidance also places strong emphasis on ensuring corporate disclosures adequately address climate-related financial risks.

How can we help?

We have advised a number of clients on corporate governance generally. Allens has recent experience advising clients on the evolution of governance duties in light of climate change.

Our work has included advising on:

  • The implications of recent climate litigation cases for their own governance duties.
  • Best practice for embedding climate risk management into systems, policies and processes.
  • The scope of disclosure obligations in relation to climate risk.
  • Crafting of external communications (including member inquiries) relevant to governance obligations.
Climate litigation

Proven strategies to minimise the risk

In the past 20 years, climate litigation has expanded significantly, and Australia is now second only to the US in terms of the volume of climate-related litigation. Proceedings are taking the form of asset-specific litigation, public law challenges, actions under financial and corporate law regulation, tort law claims, and human rights complaints.

While much of the litigation has targeted governments, we have seen a rise in legal action against corporates, particularly fossil fuel and other energy companies.

How can we help?

Our credentials in this space include assisting REST to settle recent climate-related litigation, as well as assisting a range of clients in relation to:

  • Mapping climate legal action risks (both litigation and regulatory), causes and contributors, including statutory duties and potential negligence claims.
  • Mapping strategies to minimise risk, including:
    • advising on disclosure and privilege rules;
    • developing decision-making tools for the business; and
    • developing guidelines for language to be used internally and in external communications.
  • Requirements for public disclosures and alignment with periodic reporting.
  • Potential implications of recent climate change cases for clients’ businesses, including our work on the REST litigation and the 2017 disclosure-related proceedings against the Commonwealth Bank of Australia.
Compliance advisory

Complying with the tapestry of federal and state emissions regulatory laws

Few areas of law in Australia have been subject to more volatility than that of carbon emissions and abatement. At present, at a federal level, the NGER Scheme, Direct Action and the Safeguard Mechanism govern emissions and energy consumption reporting obligations and emissions abatement obligations.

Furthermore, regulatory complexity is on the rise due to interactions with an increasing layer of state and territory emissions abatement and offsetting policies created by governments and independent regulators.

In this changeable area of law, we keep our clients on top of new policies as they emerge, to help shape their response to, and compliance with, regulatory changes.

How can we help?

We’ve advised on and assisted clients with:

  • Complying with NGERS and the Safeguard Mechanism, and commercial and contractual arrangements to manage these liabilities.
  • Achieving carbon neutrality under the National Carbon Offset Standard.
  • Understanding and complying with various state and territory carbon emissions policies, including interactions with federal-level policies.
  • Interactions with the Clean Energy Regulator and other state/territory-level regulators.
Carbon offsets

Securing opportunities to monetise abatement

As we move towards a carbon-constrained future, carbon offsetting projects present an opportunity for individuals and businesses to deliver on their carbon reduction commitments and generate new income streams.
We provide end-to-end advice to clients, to help them identify and capitalise on carbon offset opportunities, and invest in these undertakings, purchase or sell carbon offsets (including Australian Carbon Credit Units); and comply with carbon offsetting methodologies and other regulatory requirements.

How can we help?

We have advised on and assisted clients with:

  • Pursuing and establishing carbon abatement project opportunities under the Emissions Reduction Fund / Carbon Solutions Fund.
  • Undertaking M&A activity in the carbon abatement sector.
  • Generation or procurement of carbon offsets to comply with obligations under federal or state laws and policies, or conditions of project approvals.
  • Interactions with the Clean Energy Regulator and other state/territory level regulators.
Competition and consumer issues

Ensuring your climate change management strategies are compliant with competition and consumer laws

Consumers and investors are becoming increasingly conscious of climate change risks, and there is growing pressure on businesses to take steps to address those risks. A key part of our practice is ensuring your approach to climate change management is compliant with competition and consumer laws.

Competition and consumer law issues are likely to arise in relation to:

  • Green marketing: misleading consumers about environmental claims is an area in which the ACCC has for some time been highly active.
  • Industry collaboration: although well-intentioned, collaboration between businesses on effective ways to approach climate change management raises competition law concerns. There is, however, a process through which corporations can seek authorisation for conduct with public benefits that would otherwise breach Australian competition laws.

How can we help?

We've advised on and assisted clients with:

  • compliance with the Australian Consumer Law, including marketing and advertising clearance, when making environmental claims.
  • securing ACCC authorisation for implementing industry-wide standards and practices.
  • investigations by the ACCC, including successfully defending PZ Cussons in a cartel case brought by the ACCC in respect of a transition in the market to laundry detergent that was considered to have environmental benefits.
Renewable energy procurement

Deliver on carbon reduction targets at lower energy prices

As we move towards a carbon-constrained future and electricity prices rise, companies are increasingly looking for ways to deliver on their carbon reduction commitments, including purchasing electricity from renewable sources, managing their exposure to changing electricity prices and supporting carbon reduction initiatives.

How can we help?

We’ve advised on and assisted clients with:

  • Procuring, negotiating and implementing:
    • corporate Power Purchase Agreements (PPAs) – financial instruments that allow you to agree a fixed price for a notional quantity of electricity from a renewable energy generator in exchange for the spot price for electricity for the same notional quantity; and
    • electricity retail contracts that are backed (either in whole or in part) by a PPA with a renewable energy generator.
  • Developing and implementing on-site renewable energy generation solutions to reduce the amount of electricity supplied under a retail contract and diversify a company's revenue streams.
  • Negotiating demand response arrangements, where companies that are able to reduce their electricity usage for short periods, without adversely impacting their operations, receive incentives to turn off equipment, or otherwise curtail their electricity demand, or switch to on-site generation on request (usually during periods of high electricity demand).
Project approvals

Managing and de-risking the process

Climate change impacts have for many years been accepted as a relevant consideration in the assessment of planning and environmental approval applications in Australia. Until recently, the focus of consent authorities has been primarily on the direct emissions of a project; however, in recent times it is becoming increasingly common for consent authorities to also require an assessment of scope 3 emissions (being all indirect emissions of a company that occur in the company's value chain).

In recent cases, novel conditions have been imposed on projects to constrain global carbon emissions, including, in one case, restrictions on countries to which resources could be exported.

Consent authorities are also increasingly requiring proponents to demonstrate that measures have been taken to reduce, mitigate or even offset these emissions.

How can we help?

We have advised on and assisted clients with:

  • Navigating the optimal approval pathways, and engaging with regulators and stakeholders, to help de-risk and manage the process.
  • Climate change-related approval conditions.
  • Appeals of environment and planning approvals with a climate change interface.
Clean energy investments

Many corporates and institutional investors now have dedicated ESG teams in place. The application of ESG principles is increasingly regarded as a means to act in the best long-term interests of shareholders and investors, as shareholders and investors increasingly demand climate change and broader ESG commitments.

ESG considerations now factor into decision making across the lifecycle of investments, from assessing the value of opportunities, to risk mitigation, and to seeking to enhance value in the longer-term through asset management. Further, and consistently with an ESG approach, shareholders and investors are starting to look beyond purely financial analysis, to having a more holistic approach that takes into account the investment's purpose, and its impact on society and the community.

International network

Bringing you advice that considers global learnings and outcomes

Our international Environment and Climate team advises governments, corporates, financial institutions, funds and social enterprises.

The group is actively engaged in climate change initiatives. Our EU Law and Policy tracking team, based in Brussels, engages with the European institutions to track and anticipate changing policy in this area.

A key part of our practice is advising on governance and risk management relating to climate issues, and ESG more generally. We advise on strategy, regulatory interpretation, energy efficiency, carbon trading, sustainable finance, corporate reporting and financial services ESG disclosure requirements, including gap analysis, governance advice and risk management. We also advise on climate litigation.

Experience highlights include advising:

  • Corporates and financial institutions on climate change and the energy transition, and their response to activist shareholder demands on target setting, remuneration and advocacy issues.
  • On access to finance for high carbon projects in the EU, including assessment of the policy positions of multilateral institutions, ECA’s and commercial banks.
  • On exposure to litigation and liability risks, how best to mitigate these risks, and how to manage parent company targeting by activist litigators.
  • In respect of carbon issues under the EU ETS and other carbon trading schemes.
  • On a wide range of carbon and carbon offset transactions.

In line with our commitment to sustainability, we have set a science-based target to reduce our firm-wide greenhouse gas emissions by 50 per cent by FY2030 from a FY2019 baseline. Our target has been independently assessed and validated by the Science Based Targets initiative.

We were also the first Australian law firm to achieve carbon neutral organisation certification for our Australian offices through the Australian Government's Climate Active Carbon Neutral Program in December 2014. By sourcing high-quality carbon offsets in partnership with the Qantas Future Planet Program, we seek to support projects with social and economic co-benefits, including Indigenous carbon farming projects in Northern Australia. Learn more here.

We are proud to be members of the Carbon Markets Institute.


Voluntary carbon offsetting

Advised financial sector clients to procure carbon units to become carbon neutral by voluntarily procuring carbon offsets. This involved advising on the National Carbon Offset Standard, as well as negotiating tailored ISDA documentation for the staged transfer of carbon units.

National Greenhouse and Energy Reporting Scheme (NGERS)

Advised a large range of clients on their compliance with the NGERS, including Rio Tinto, Eni Australia, Macquarie Capital Advisers, Newcrest Mining, IPR-GDF Suez, Woodside Energy, Xstrata, LinkWater, SunWater, QWI, Tassal, Port of Brisbane and CB Richard Ellis.

Carbon pass-through clauses

Advised clients on the opportunities and risks associated with the Emissions Reduction Fund, which expanded the pre-existing land sector-based Carbon Farming Initiative and the proposed Safeguard Mechanism. Our experience includes assisting the Wiliggin Aboriginal community in the North Kimberly region of Western Australia.

Emissions Reduction Fund and Carbon Farming Initiative

Advised clients on the opportunities and risks associated with the Emissions Reduction Fund, which expanded the pre-existing land sector-based Carbon Farming Initiative and the proposed Safeguard Mechanism. Our experience includes assisting the Wiliggin Aboriginal community in the North Kimberly region of Western Australia.

Wind farm projects

Acting for sponsors and financiers, our roles have involved advising on planning and development approvals, the environmental assessment process, land tenure issues, construction issues, joint venture arrangements, investment structuring and taxation issues.


Advised on agricultural and forestry offsets projects to offset carbon dioxide emissions in New South Wales, Victoria, Queensland and Western Australia.

Emissions abatement projects under the Clean Development Mechanism

Advised Macquarie Global Investment on the establishment of an incorporated joint venture (BioCarbon Group Pte Ltd), with the International Finance Corporation and others, to deliver avoided deforestation projects, initially in Indonesia.

Carbon pricing disputes

Advised both suppliers and purchasers of electricity on disputes regarding the pass-through of carbon costs under their electricity supply contracts.

Mine development

Advised on climate-related litigation relating to the development of coal mines, including advising clients on the implications for the sector of the recent Rocky Hill decision in the NSW Land and Environment Court.

Carbon capture and storage

Advised the Victorian Government on the Commonwealth carbon capture and storage legislation, and in relation to proposed Victorian carbon capture and storage legislation.

Carbon Pricing Scheme

Advised clients, including Rio Tinto, Woodside Energy, Newcrest Mining and Xstrata, as well as numerous electricity generators, gas transporters, LNG/gas producers and electricity/gas retailers, on their compliance with the previous federal carbon pricing scheme.