Keeping Up with ESG in Australia – October 2024

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 legislation protecting employees from costs in unsuccessful discrimination cases and the UN Biodiversity Conference (COP16).

Key highlights

1. In the spotlight: New legislation passes protecting employees from costs in unsuccessful discrimination cases
2. Global focus on nature - Australian Government further develops its nature and land strategies
3. ASFI reveals sluggish progress on sustainable finance
4. Australian Government introduces significant cyber law reforms
5. Federal Government’s paid family and domestic violence leave laws working as intended but not fully utilised

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In the spotlight: New legislation passes protecting employees from costs in unsuccessful discrimination cases 

In September 2024, Parliament passed the Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 in response to the Respect@Work report recommendations. The amendments fundamentally change the costs provisions in the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act). These changes are designed to ensure that the risk of costs ordered does not deter applicants from bringing claims.

The Federal Court has a general discretion to order costs in unlawful discrimination and/or sexual harassment proceedings brought pursuant to the AHRC Act. The Federal Court generally exercises that power according to the principle that ‘costs follow the event’. That means an unsuccessful party is usually ordered to pay the costs of the successful party. This approach can be contrasted with claims brought under the Fair Work Act 2009 (Cth) (FW Act), which is a default ‘no costs’ jurisdiction. Under the FW Act, costs are only awarded against either party in exceptional circumstances (e.g. where a proceeding was commenced vexatiously, or a party acted ‘unreasonably’ and caused the other party to incur costs).

The new amendments provide that in Federal Court proceedings for unlawful discrimination and/or sexual harassment:

• The respondent to the proceedings will be liable for the costs of the applicant if the applicant is successful on one or more grounds, unless it can be demonstrated that the applicant acted unreasonably in incurring those costs; and
• The applicant to the proceedings will only be liable for the respondent’s costs if:
  • the applicant instituted the proceedings vexatiously/without reasonable cause, or
  • the applicant acted unreasonably, causing the respondent to incur costs, or
  • the respondent:   
    • was successful in the proceedings;
    • does not have a significant power advantage over the applicant; and
    • does not have significant financial or other resources relative to the applicant.

The changes go significantly beyond the recommendation in the Respect@Work report, which advocated for a costs neutrality model like that in the FW Act, where each party bears its own costs, except where it has acted vexatiously or unreasonably. The new amendments also align with the costs regime in relation to whistleblowers under the Corporations Act 2001 (Cth), where if a whistleblower is unsuccessful in their claim for compensation for detriment against a person or company, the whistleblower is protected from having to pay their costs (unless a court finds the claim was vexatious or the whistleblower had acted unreasonably). The new provisions are therefore skewed heavily in favour of applicants.

These new laws have the potential for increased litigation in this area (both individual and representative claims) due to reducing the costs barrier to bringing claims, i.e., for those who may have otherwise been deterred from filing claims due to the fear of an adverse costs order being made against them. These changes may also increase the likelihood that any unacceptable and unlawful behaviour is reported and addressed at the workplace level before any proceedings are brought.

This decrease in barriers to bringing claims is part of the suite of Respect@Work reforms, which overall present an opportunity for clients to proactively address inappropriate workplace conduct and systemic issues in the workplace to ensure productive and positive workforce outcomes. Businesses should take this opportunity to evaluate, and continue to review and revise, their existing frameworks and control measures, to ensure that they are fully compliant with all laws and best practice, particularly in light of the positive duty to eliminate, as far as possible, unlawful discrimination and sexual harassment.

See our article on the AHRC Guidelines for complying with the positive duty under the Sex Discrimination Act for more.

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Global focus on nature - Australian Government further develops its nature and land strategies 

It’s been an exciting month for global biodiversity developments. The United Nations COP16 (the sixteenth conference of parties to the Convention on Biological Diversity) was held in Columbia. Meanwhile, Herbert Smith Freehills delegates attended the Global Nature Positive Summit from 8-10 October 2024 and the UN Global Compact Network Australia’s Sustainability in Action conference on 30-31 October.

A key theme of discussion at both the Summit and the industry-focussed conference was the need for effective government action to establish regulatory frameworks that support nature positive action by private actors, linked to the important role of the business community in achieving global goals around nature. As we see greater convergence around a framework for valuing nature, we also see a greater focus on the way dependency on nature and risk associated with the changing state of nature can reflect material financial risk to business, relevant to strategy and planning.   

In line with growing international and Australian interest in 'nature positive’ outcomes – halting the decline in biodiversity and achieving improvement to the state of nature over time - the Australian Government has taken steps to achieve its national target to protect 30% of Australia’s landmass and 30% of its marine areas by 2030, which was agreed to by Australian Environment Ministers in 2022.  Australia has already surpassed its marine targets. In furtherance to the 2023 expansions, the Australian Government increased protections to the sub-Antarctic Heard and McDonald Island Marine Parks in October 2024, raising the total protected waters from 48% to 52%. The recent draft of the South-east Marine Parks Network management plan proposes additional no-take zones, bans on oil, gas and deep-sea mineral mining, aiming to increase the highly protected areas to 86% of the enitre south-east network. The greater challenge exists in achieving the 30% landmass target. Currently, the National Reserve System (NRS) protects 22% of Australia’s land. Additional landmass equal to nearly 3 times the size of Victoria will need to be protected or conserved by 2030 to meet the target. The National Roadmap (below) details key steps and areas in which the government will be targeting, particularly around incentives to drive greater private land owners into designating more land to the NRS.

In the lead up to COP16, the Australian Government developed its position on how it intends to meet the obligations under the Global Biodiversity Framework – the National Biodiversity Strategy and Action Plan for 2024-2030 and National 30 by 30 Roadmap:

Australia’s Strategy for Nature 2024-2030

Achieving 30 by 30 on Land Government Roadmap

Provides the overarching framework for local, state, territory and federal government actions to contribute to achieving the 23 Global Biodiversity Framework targets by 2030 Builds on the 3 goals, underpinned by 12 objectives, set out in the original 2019 strategy. The goals are: connecting Australians with nature; caring for nature in all its diversity; and sharing and building knowledge. Sets out 6 national targets and 3 enablers of change that aim to halt and reverse biodiversity loss in Australia. Acknowledges the fact that biodiversity is currently declining in Australia and more broadly that the state of Australia’s environment is poor and deteriorating.

Roadmap for achieving Australia's target of protecting and conserving 30% of Australia’s land and inland waters by 2030. Envisions expanding both public and private protected areas, building the Conserved Area Network, and improving monitoring and reporting. The increase in private protected areas is a key focus in the Roadmap, with 60% of Australia’s land privately owned or managed yet only 6% of the National Reserve System. Means of achieving results in increasing private protected areas will be through the Nature Repair Market; tax concessions for private landowners; and revolving funds for purchasing natural or cultural valuable properties. The Australian Government, in partnership with state and territory governments, will continue investigate ways to increase protection, through market mechanisms, and pursue further research opportunities.

As the dust continues to settle from COP16 and more reflection is likely to take place in the coming weeks as to the progress that was made, or lack thereof, we can see certain notable high level takeaways as they relate to Australia. Including:

• Australia appears to be progressing comparatively well in its efforts, having already established roadmaps and strategies, while nearly three-quarters of the nations are yet to finalise their plans.
• The establishment of a new permanent subsidiary indigenous body will likely support continued emphasis on the role of Indigenous Australians in Australia’s achivement of its biodiversity goals.
• Whilst COP16 did not reach a consensus on a monitoring framework, the summit continued to underscore the need for improved monitoring and reporting mechanisms.
• The Australian Government and private businesses will be expected to contribute to the ‘Cali fund’ from resources and benefits obtained from genetic materials sourced from natural ecosystems.
• Significant issues around funding were left unresolved from COP16, with many countries yet to pledge funds (including Australia).

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Sustainable finance: ASFI reveals sluggish progress on sustainable finance

The Australian Sustainable Finance Institute’s (ASFI) fourth annual progress tracker report exposes slow progress in Australian green finance flows. The report rates the implementation of the Australian Sustainable Finance Roadmap a score of 2.8 out of 5, explaining that the modest progress is partly due to the ‘inevitable lag time between policy and regulatory reform and outcomes’. ASFI has identified nine priority action areas for the next 12 months, which may help inform where the Government’s focus for sustainable finance will be. These include encouraging:

• heightened attention from Government, industry and financial institutions on net zero targets;
• better guidance from Government and industry to ensure the mandatory climate disclosure regime is not a mere compliance exercise; and
• the Government to do more to address existing regulatory barriers to sustainability collaboration, and engage more deeply at an international level on sustainable finance to ensure relevant frameworks, policies and standards are interoperable across jurisdictions.

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Australian Government introduces significant cyber law reforms

On 9 October, the Australian Government introduced the Cyber Security Bill 2024 (Cth) (Bill) to Parliament. The Bill represents a significant step to better prepare Australia for future cyber threats by providing a comprehensive framework to tackle cyber security issues, and promoting cooperation and trust-building between government and industry.

Specifically, the Bill aims to implement the seven initiatives outlined in  Australia’s 2023-2030 Cyber Security Strategy which intends to position Australia as a global leader in cyber security by 2030. These initiatives include:

• mandating minimum security standards for smart devices (such as smartphones, computers and other connectable devices);
• introducing mandatory ransomware reporting obligations for certain businesses;
• introducing a ‘limited use’ obligation for cyber security information shared by organisations with the National Cyber Security Coordinator and the Australian Signals Directorate;  and
• establishing a Cyber Incident Review Board, which will conduct ‘no-fault’ post-incident assessments of certain cyber incidents.

One of the more significant changes introduced by the Bill is the mandatory reporting of ransomware and cyber extortion payments. Applicable entities that meet an annual turnover threshold (which is to be specified in the Minister’s rules) must submit a ransomware payment report within 72 hours of making the payment or realising that a payment has been made. The nature and form of this report is yet to be clearly finalised, but the Bill suggests that certain information about the cyber extortion incident is required, including threat actor communications and the extent of impact.

The Government separately introduced the Security Of Critical Infrastructure And Other Legislation Amendment (Enhanced Response And Prevention) Bill 2024 (Cth) as part of the same cyber legislative package. If passed, this Bill will amend the existing Security of Critical Infrastructure Act 2018 (Cth) to give the Government broader powers and also address known gaps and issues with the current Act.

These reforms have come in the wake of several large-scale, public cyber incidents concerning Australian companies (and Australian customers’ data) in the past years. It is unsurprising that cyber security is top of mind for the Government and industry alike. The cyber law reforms provide a timely reminder that businesses should continually monitor cyber security risks and processes, and ensure they are familiar with any regulatory reporting obligations, disclosure obligations or any other applicable requirements that may apply if a cyber incident occurs.

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Report finds Federal Government’s paid family and domestic violence leave laws working as intended but not fully utilised 

An independent review’s report into the 10-day paid family and domestic (FDV) leave entitlement introduced by the Federal Government revealed that the entitlement was operating as intended by enabling victim-survivors to take steps to ensure their safety without jeopardising their income or employment, however, it has not been fully utilised by those eligible to take it. This was largely due to poor awareness at both the employer and employee level of the entitlement, resulting in low reports of any instance of their workers using the paid leave entitlement.

The report also found that uncertainty surrounding evidentiary requirements was also a barrier to those trying to access the entitlement. Whilst the FW Act permits employers to ask for evidence to confirm that an employee is experiencing FDV, the process of obtaining evidence and initiating a conversation about evidence was difficult for victim-survivors. The report recommended that the Government revise its FDV leave resources to focus on evidentiary requirements (amongst other things).

In particular, a key concern raised by employee stakeholders was managing employee confidentiality. Employers have obligations under privacy laws to protect the personal information of its employees, and the requirement to substantiate an employee’s entitlement to paid FDV requires a delicate balance between disclosure requirements and employee privacy. Businesses should focus on increasing their awareness and understanding of the leave entitlements in their workplace and ensuring sufficient processes are in place to protect victim-survivors’ privacy when requesting evidentiary requirements from employees to satisfy the criteria for the FDV leave entitlement.

 

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For clients with a presence in the United Kingdom, South African Development Community or Asia, we also publish trackers of ESG publications and developments for these regions at ESG Notes.

ESG thought leadership

To read more of our ESG thought leadership, please see:

• Our 2024 Unlocking ESG Investment in Australia Report

• Latest recordings of Third Wheel Podcast Series: ESG in Australia

• Stuck in the Middle? Unlocking ESG Investment in Australia 2024 report

• ESG Notes and Climate Change Notes, 

• ESG, Sustainability and Responsible Business offering

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Written with assistance of Emily Tang, Elise Plunket, Sarah MacDonald and Kate Dobson (Head Office Advisory Team), James Moloney (Environment, Planning & Communities), Rose Kethel (Disputes), Rae Huang and Courtney Van Vorsselen (Employment, Industrial Relations and Safety), Rosalind Wei and Stewart Stevenson (Project Finance).