Originally published by Ryan Cropp and Sally Patten of Financial Review
19.04.2026
The Albanese government’s new chief lawyer says boards of Australian oil and gas companies could face a wave of legal action because of an offshore ruling on climate change, adding to the heavy burden of environmental compliance risks already facing directors.
Ruth Higgins, a senior ranking member of the bar who this month was unveiled as the new solicitor-general, is one of three Australian barristers behind advice warning that a major international climate ruling could have significant impacts for big carbon emitters, including coal companies.
The decision, which was handed down last year at the International Court of Justice in The Hague in the Netherlands, found that national governments had a legal obligation to protect the climate system from greenhouse gas emissions.
The ICJ decision came in the midst of Australia’s ultimately unsuccessful bid to host a major United Nations climate summit and prompted government officials to seek advice from the attorney-general’s and foreign affairs departments about its implications and how to handle it, according to documents produced under freedom of information laws.
In a lengthy legal opinion to be published on Monday, co-authors Higgins, Jennifer Robinson and Zoe Bush said the ruling increases the likelihood that new carbon intensive projects, such as coal mines and oil and gas fields, could be restricted by government regulations influenced by the ICJ, while projects that have been approved could be challenged through the courts.
Company directors who fail to properly analyse or disclose the risks of projects being halted or thwarted as a result of the increased regulatory and legal uncertainty could be found to have breached their duties and be sued by shareholders or the securities regulator, the lawyers said.
They also pointed to a greater risk that shareholders, the Australian Securities and Investments Commission and activist groups will use the ICJ ruling as a basis on which to take companies to court on climate risk grounds.
At least three civil actions against oil and gas and coal projects in Australia, including against the planned extension of Woodside’s North West Shelf oil and gas project off the coast of Western Australia, base part of their argument on the ICJ document.
“The [ICJ decision] has already precipitated legal and regulatory developments that create or amplify climate-related transition risks to which some Australian corporations, particularly those that derive revenue from fossil fuels or other emissions-intensive activities, are exposed. We expect it will continue to do so,” the barristers conclude.
“As the magnitude of those risks or the probability of their occurrence rises, so too may the standard of care expected of directors of those corporations,” they say in the 39-page opinion, commissioned by advocacy organisation Climate Integrity.
Legal actions are expensive to defend and even if they are unsuccessful can lead to lengthy, costly delays for projects to be completed. If the companies are sued successfully, projects may need to be mothballed, which could trigger a sell-off of the company’s shares.
If directors failed to properly consider or disclose the risks that projects may be limited, prohibited or rendered financially unviable, they could be found to be in breach of their duties.
The burden for directors comes on top of the tougher compliance standard relating to a new climate reporting regime, which took effect in January 2025.
Under that regime, companies which are roughly equivalent to those in the ASX 200 and their private equivalents must detail climate-related risks over the short, medium and long term, including for scope 3 emissions from their customers and suppliers. Medium and smaller companies will be captured by the regime in the coming years.
Centre for Policy Development chair Zoe Whitton said Australia’s strong climate reporting regime meant the ICJ ruling was more likely to implicate fossil fuel activity.
“It presents this really difficult tightrope for directors of [fossil fuel] producing companies to walk,” she said. “They are going to face lots of economic incentives … to lean on supply, but the ICJ opinion very clearly says that new supply needs to be scrutinised very heavily.”
“It highlights the importance – at least at a federal level – of finding ways to establish energy security that doesn’t increase reliance on fossil fuels.”
“This is going to give governments more space to regulate and constrain the activities of their fossil fuel producers when they believe that’s in their interests,” she said.
Already, NSW has said it will ban the development of greenfield coal mines.
A spokesperson for the Australian Institute of Company Directors said boards were grappling with complex issues including disrupted supply chains and rising cyber threats.
“It is important that boards think about how to build business resilience and sustainable value through the net zero transition.”