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This essay focuses on the issues surrounding environmental sustainability and the impact it has on corporate governance. It will focus primarily on the changes that will occur for internal corporate governance in Australia once the new Carbon Pricing Sche

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Introduction

ENVIRONMENTAL SUSTAINABILITY & ITS IMPACT ON CORPORATE GOVERNANCE I INTRODUCTION In recent years it has been established that global corporations have contributed immensely to climate change and the sustainability of the planet.1 Decisions made by corporations have impacted adversely on environmental resources2 through the production of greenhouse gases ('GHGs'), the unsustainable use of biodiversity, and by the production of toxic and hazardous substances and waste.3 Since the early 1990s, it has been documented that multinational corporations generate more than 50 per cent of global GHG emissions.4 However, over the past 45 years, since the actions of corporations were recognised as being potential threats to the environment, there has been a significant shift in thinking. Decisions made by companies, which are regulated by corporate law Governments worldwide are introducing stringent "climate laws" to curb further environmental damage.5 It is now becoming evident that corporations need to bear the lion's share of responsibility in actively curtailing their emissions into the global atmosphere.6 This essay focuses on the issues surrounding environmental sustainability and the impact it has on corporate governance. It will focus primarily on the changes that will occur for internal corporate governance in Australia once the new Carbon Pricing Scheme ('CPS') is implemented from 1 July 2012. A brief summary will be outlined regarding the emergence of international environmental law and ecological sustainability, the traditional ways corporations have been governed, and how the new CPS will affect corporate governance after 1 July 2012. II THE EMERGENCE OF INTERNATIONAL ENVIRONMENTAL LAW & ECOLOGICAL SUSTAINABILITY Environmental sustainability is one of the defining political challenges of the 21st century.7 Water scarcity, climate change and threatened biodiversity have emerged because humans have, for far too long, overlooked environmental externalities as a variable in decision-making processes.8 One of the challenges of sustainable development is for corporations to consider modes of industrial organisation, in addition to the internal organisation of a firm which will lead companies towards a future which promotes environmental protection and equity.9 This has led to unremitting ...read more.

Middle

Such risks are likely to include impacts of climate change, carbon pricing or environmental and sustainability legislation on the company.40 In addition, under ASX Listing Rule 3.1, it provides that once a listed company becomes aware of any information that would reasonably be expected to have material effect on the price of its listed securities, it is required to immediately disclose that information to the ASX.41 The CPS is likely to increase cost of inputs and affect overall profits.42 As a result, listed companies must ascertain the effect of the scheme on financial forecasts. A failure to make appropriate disclosures will attract sanctions under section 674 of the Corporations Act.43 V CONCLUSION There is no doubt that climate change is a major concern in relation to environmental sustainability in the 21st century. It is evident that the climate change net is being drawn increasingly tighter around corporations with respect to corporate governance obligations.44 The internationally agreed environmental principles such as the Kyoto Protocol,45 provide a legal basis for environmental interests to be included within corporate governance regimes. These principles reflect new norms that national and global corporations will be increasingly called upon to uphold.46 The Australian Federal Governments move to introduce a national Carbon Pricing Scheme only strengthens the stand it has on achieving the sustainable development objective that has thus far eluded international environmental law. By ensuring corporations and their directors adhere to the strict provisions, the Australian Government is taking the first step in securing an ecological sustainable future not only for its citizens, but also for the viability of its corporations. BIBLOGRAPHY 1. Articles/Books/Reports Allens Arthur Robinson, Climate Change: Carbon Pricing Scheme (12 July, 2011) <http://www.aar.com.au/pubs/cc/foccjul11.htm> at 5 July 2012. Angel, Jeff, 'CSR - Saving the Environment?' (2005-2006) 87 Reform Issue 32. ASX - Australian Securities Exchange, Listed Entities Update: Important Information for ASX Listed Entities (05/11 ed, 19 July 2011) ...read more.

Conclusion

Australian Journal of Corporate Law 186. According to MacMillan, 'the shareholder primacy model of the corporation, which requires it to put the interests of its shareholders in the generation of corporate profits above other considerations, may tend to induce corporate behaviour that is environmentally harmful.' 22 Jackson, above n 20, 89. 23 Ibid, 90. 24 World Resources Institution, World Resources 2002-2004: Decisions for the Earth: Balance, Voice, and Power (2003) <http://www.wri.org/publication/world-resources-2002-2004-decisions-earth-balance-voice-and-power> at 9 April 2012, 107. 25 Elisa Morgera, above n 3, 8. 26 Valerie Ann Zondorak, 'A New Face in Corporate Environmental Responsibility: The Valdez Principles' (1991) 18 Boston College Environmental Affairs Law Review 457, 457 in David Ong, 'The Impact of Environmental Law on Corporate Governance: International and Comparative Perspectives' (2001) 12(4) European Journal of International Law 685, 688. 27 Corporations Act 2001 (Cth) s 299(1)(f). 28 Janet Dine, The Governance of Corporate Groups (2000) 162. 29 David Ong, 'The Impact of Environmental Law on Corporate Governance: International and Comparative Perspectives' (2001) 12(4) European Journal of International Law 685, 716. 30 Livingstone, above n 10, 297. 31 Clean Energy Act 2011 (Cth), Pt 3. 32 Lyster, above n 1, 309. 33 Corporations Act 2001 (Cth) s 108(1). 34 Gideon Meltzer, Corporate & Commercial February 2012 Newsletter (27 February, 2012) Cornwall Stodart Legal Expertise, <http://cornwalls.com.au/sharing-knowledge/legal-updates/corporate--commercial-february-2012-newsletter.aspx> at 5 April 2012. 35 Clean Energy Act 2011 (Cth). 36 Ibid. 37 Ibid, ss 248(1), 248(2) and 248(3). 38 ASX Corporate Governance Council, ASX Corporate Governance Principles and Recommendations (2nd ed, 2010) <http://www.asx.net.au/governance/corporate-governance.htm> at 9 April 2012. 39 Ibid. 40 Alfonso Grillo, ASX to Review Disclosure of 'Environmental' and 'Sustainability' Risks in Corporate Governance Statements of Listed Companies (TressCox Lawyers, 18 August, 2008). 41 Allens Arthur Robinson, above n 18, 9. 42 Gideon Meltzer, above n 34. 43 Corporations Act 2001 (Cth) s 674. 44 Lyster, above n 1, 281. 45 Kyoto Protocol, above n 13. 46 Nazli Choucri, 'Corporate Strategies Towards Sustainability' (1994) in Ong, above n 29, 695. ?? ?? ?? ?? 1 1 ...read more.

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