Water as a commons They hang the man and flog the womanThat steal the goose from off the common,But let the greater villain looseThat steals the common from the goose. English folk poem, circa 1764
Unsustainable practices noted The poet C.J Dennis also saw this in the poem[i] Ye are the Great White People, masters and lords of the earth, Spreading your stern dominion over the world's wide girth. Here, where my fathers hunted since Time's primordial morn, To our land's sweet, fecund places, you came with your kine and corn. Mouthing your creed of Culture to cover a baser creed, Your talk was of White Man's magic,- but your secret god was Greed. And now that your generations to the second, the third have run, White Man, what of my country? Answer, what have you done? [i] C JDennis ‘The Spoilers’ The Herald 1935 p.6 This poem was about the Western District of NSW and written through the eyes of an Australian Aborigine.
Water security Many Stakeholders many interlocking scales • domestic local supplier level • Rural growers often other suppliers • Other businesses • Province and State level which can involve upstream downstream issues • National level • International level and globally the relationship to development
Water Security-Australia • We have Ministers with that portfolio at State level and water supply businesses who have a major corporate objective water security. • How to achieve it and the appropriate enduring law and policy decision making framework?
Water security “…the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.” World Business Council on Sustainable Development
Social Primacy Approach Identification of & prioritisation between stakeholders unclear
Water plans as a way to increase security • Purpose of a WAP is to: • share of consumptive pool approach • Balance environmental, economic and social needs for water • Flexibility and equity in access to the resource • Promote active and expeditious use • Promote efficient use • Sustain the resource, and protect reliant ecosystems and community
the balance is the challenge • Environmental: reliant ecosystems. • Economic: irrigated agriculture, industry and aquaculture. • Social: town water supply, stock and domestic, and recreation (sporting clubs & local government
The water ‘crisis’ • A perceived water crisis has emerged • Both government and the corporate sector are required to respond to the challenge • How does/should the law facilitate the corporate sector’s response to the demand for sustainable water use?
To achieve sustainability… • Relying on corporate social responsibility or general duties to act in an ecologically sustainable manner alone insufficient; similarly trying to implement water management planning without corporate commitment to sustainability may suffer from traditional difficulties associated with command and control regulation
Corporate Social Responsibility • Normative commitment much broader in scope than matters coercible through legal regulation • Applies to relationship between corporation and those it impacts upon (past, present & future) – essentially individually determined by the corporation – not collectively by legislature; government. • In the past has been difficult to apply because of a lack of methodologies/systems/understanding/lack of integration with public policy development
Example – OK Tedi • BHP – Biliton = leader in CSR • From 1970s – 2001 engaged in development of open-cut copper mine at Ok-Tedi in PNG Highlands • Mine = 10% of PNG’s GDP
Ok-Tedi • Originally mine was meant to have tailings dam – but not built; so mine waste dumped into Tedi River at the rate of 80,000 tonnes per day • Leading to 90% fish death, water contamination & forest die back • Litigation initiated by local communities against BHP
Ok-Tedi • BHP settled disputes; eventually forced to transfer its interest in mine to PNG Sustainable Development Program Ltd & write off investment
CSR • Various approaches have been identified in the literature, today will focus upon 2: - Business approach- mainstream – applicable to most large corporations in Australia - Social Primacy approach – Requires social welfare to be prioritised over corporate welfare – most Australian water supply corporations appear to follow this approach
How does the law support either approach? Social Primacy Approach • General duties toward ESD – eg s 292 (3) Water Management Act 2000 (NSW); s 93 Water Act 1989 (Vic) • Control of pricing • Imposition of customer service standards • Imposition of water quality and efficiency planning • Imposition of community service obligations
Social Primacy Approach • Law also requires water corporations to act competitively • Trade off between CSR obligations & commercial obligations not clear
Social Primacy Approach • Under resourced • Methodologies for assessing sustainability still developing • Environment only salient via government & regulators
How does the law support business approach? • General duties on corporation not to harm environment or to abuse natural resources eg s 9 Natural Resources Management Act 2004 (SA); s 25 Environment Protection Act 1993 (SA)
Law & business approach • Imposition of directors’ duties for corporate breach • Directors’ duties to the corporation to ensure corporation’s interests are protected
No proactive duty re: ESD • No legal duty on corporation or upon directors of corporation to actively promote ESD • Legal duty to stakeholders rejected by CAMAC & PJCCS – too difficult to review and enforce
How does law support the business approach? • Sustainability reporting largely voluntary • No universally accepted standards • Limited & weak statutory requirements – s 299 (1)(f) Corporations Act 2001 (Cth)
Law & Business approach • Where investment promoted as socially responsible – Product disclosure statement must disclose how environmental, social, ethical considerations are taken into account, measured and applied: s 1013D (1) Corporations Act 2001 (Cth); Reg 7.9.14C Corporations Regulations
Other reporting requirements • National Greenhouse and Energy Reporting Act 2007 (Cth) • National Environment Protection (National Pollutant Inventory) Measure 1998 (Cth)
Other corporate governance legal mechanisms • Shareholders have very limited powers over managerial discretion regarding day to day business, planning, policies; so they cannot override directors • Although shareholders have power to convene meetings/replace directors – generally attempts to convene meetings/replace directors to sanction poor environmental performance have failed
Other mechanisms • Shareholder litigation equally limited unless breach of duty to company also personally harms shareholder or shareholder can show that directors’ decision re: ESD matter harms corporate interests.
Stakeholders generally • Have no standing to sue for breach by corporation or management unless they can show direct damage or ‘special interest’ • Overseas cases indicate this will be difficult eg Connecticut v American Electric Power (2005) 406 F Supp 2d 265
Prognosis? • CSR can be supported by law but difficult to make it a legally coercible - since there is no universal definition or universally accepted means of measuring it. • Therefore should not wholly rely on CSR to secure corporate engagement with sustainability
Rather… • Objective and specifically formulated obligations required to secure corporate engagement with sustainable water use and management. • Qld, Vic & to a limited extent NSW have initiated new regulatory approach engaging corporations in process of water efficiency management planning.
WEMPs • Corporations must account for water use • Corporations must identify water saving measures • Corporations must prepare plans for implementing water saving measures • Each plan must be independently certified • Reporting against plan mandatory • WEMPs supported by significant funding
WEMPs • Case studies demonstrate success – therefore a step in the right direction for securing sustainable water use
Conclusion • Noblesse oblige alone insufficient • Engaging corporations in water planning and management and leveraging off the mainstreaming of CSR leads to higher levels of compliance and greater regulatory efficacy.