ESG (Environmental, Social, and Governance) is a portmanteau term generally construed to import a variety of social and ethical considerations into the operations of corporates (whose profit priority has largely been unquestioned). While ESG matters to private companies, its relevance to governments and their agencies cannot be ignored.
Unlike the private sector, governments and their administrations are influenced by public policy considerations informed by ESG. This article examines the intersection of ESG and government, and considers how ESG policies will affect agencies in the future.
As mentioned above, ESG embraces a broad set of regulatory, legal and ethical issues. However, there is much scope for debate about what is, and isn’t, ESG.
A paradigm for ESG can be found in the United Nations (UN) Sustainable Development Goals (SDG) – “a globally accepted framework for sustainable development that recognise the co-dependence of society, the economy and the environment.” Established in 2015, the SDG's initial horizon is 2030.
There are 17 discreet SDGs which include “no poverty”, “good health and well-being”, ‘’quality education”, and “affordable and clean energy”. While SDGs are framed in terms of policy, they are equally applicable to both government and private sector organisations.
The paradox and challenge presented by ESG for non-government corporates include:
The intersection of this paradox has come to be known as ‘greenwashing’, where claims to sustainability are (at worst) fabricated, or (at best) exaggerated.
ESG will impact agencies both expressly (through rolling out government programs) and implicitly. As governments are increasingly held to high ethical standards (as the work of ICAC reminds us), ESG considerations will undoubtedly have a growing impact on their operations.
As observed above, elements of ESG are currently the subject of legislation and, given current domestic and international trends, it is likely that ESG legislation will only increase over time.
So how can agencies inform themselves and their operations (for example, when setting priorities) with regard to extant (if evolving) social mores? Should generalised notions of equity, diversity, or care for the environment (for example) factor into decision-making? Can they be excluded? We highlight some situations below where ESG considerations may come into play.
Potential private and public sector employees are increasingly interested in an employer’s stance on ESG. Agencies, like any other employer, must recognise that their approach to such issues will impact their ability to attract and retain talent.
While the reference above to greenwashing was specifically related to the private sector, there is no doubt governments and their agencies may fall prey to that temptation as well.
Officious NGOs have already taken legal action against government agencies to attempt to compel action, or better action, on ESG policy platforms.
While anticipating the pace of ESG may be challenging (as it is still subject to politics), the momentum is clear. In addition to the government’s role as an ethical legislator and regulator, governments and, specifically, agencies have a leadership role to play in ESG. A current example is the Sustainability Advantage initiative of the Department of Planning and Environment.
According to its website, the initiative “champions the role business can play in achieving [the SDG] by 2030.” Members include NSW Ports and Port of Newcastle, Tamworth and Northern Beaches councils. These goals are clearly articulated, if ambitious. Whether 2030 continues to be a realistic timeline remains to be seen.
ESG policy settings (such as the SDGs) will affect government agencies through policy and priorities. Clarity and transparency will be the best way to ensure this is meaningful and to avoid allegations of greenwashing.
See here for more information on ESG. If you have any questions, please get in touch with any member of our team below.
Author: Geoff Farnsworth
AAT Bulletin Issue No.5/2023
The AAT Bulletin is a fortnightly publication containing information about recently published decisions and appeals against decisions in the AAT’s General, Freedom of Information, National Disability Insurance Scheme, Security, Small Business Taxation, Taxation & Commercial and Veterans’ Appeals Divisions (13 March 2023). Read more here.
The Court of Appeal maintains a list of matters before the Court for which judgment is reserved (17 March 2023). Read more here.
NSW Government expands building industry reforms
To better protect homeowners and workers, the NSW government has expanded its building industry reforms to include “buildings where people live and work including shared accommodation, hostels, boarding houses and residential aged care”. Read the article here.
NSW kickstarts decarbonisation and circular design in infrastructure (NSW)
The cost of carbon in future NSW Government infrastructure projects will be measured in business cases to drive down emissions and costs in NSW. Read the notice here.
The Council of the City of Sydney v Emag Apartments Pty Limited  NSWLEC 23
APPEAL – s 56A of Land and Environment Court Act 1979 (NSW) – cl 6.21 of the Sydney Local Environmental Plan – proper construction of design excellence clause – whether Commissioner failed to have regard to mandatory requirements – cl 55 of Environmental Planning and Assessment Regulation – whether error of law in granting consent to amended DA where DA not lawfully amended – lack of owner’s consent at time unamended DA determined – whether Commissioner failed to give adequate reasons – appeal allowed and remitted to Commissioner – respondent to pay costs.
Environmental Planning and Assessment Act 1979 (NSW); Land and Environment Court Act 1979 (NSW); Environmental Planning and Assessment Amendment (Planning Portal) Regulation 2020 (NSW); Environmental Planning and Assessment Regulation 2000 (NSW); Environmental Planning and Assessment Regulation 2021 (NSW).
Randwick Council v Fusion Developments Pty Ltd  NSWLEC 19
APPEAL – appeal against Commissioner’s decision in Class 1 proceedings – local environmental plan requires development on site to exhibit design excellence – the plan sets criteria for assessment of design excellence – plan also makes provision requiring a “competitive design process” – the plan also permits dispensation to be given from requirement for a “competitive design process” – Commissioner concludes proposed development demonstrates design excellence – Commissioner exercises discretion to dispense with “competitive design process” – consideration of whether Commissioner’s exercise of discretion miscarried – no error in Commissioner’s exercise of discretion to dispense with “competitive design process” – appeal dismissed – Applicant ordered to pay Respondent's costs of the appeal.
Environmental Planning and Assessment Act 1979; Land and Environment Court Act 1979; Land and Environment Court Rules 2007; Randwick Local Environmental Plan 2012.
Developer Entity Pty Ltd v Strathfield Municipal Council  NSWLEC 1118
APPEAL – development application – multi dwelling housing – compliance with minimum lot size development standard – whether consistent with the objective of the standard – whether bulk and scale appropriate for the site in its context.
Environmental Planning and Assessment Act 1979; Strathfield Local Environmental Plan 2012.
Ogilvie v Rovest Holdings Pty Ltd  NSWLEC 17
JUDICIAL REVIEW – Ground 1 – Council grants development consent for proposed motel – development consent incorporates approval under the Local Government Act 1993 (the Local Government Act) to install multi‑room accommodation modular units transported to the site to provide accommodation for the motel – whether modular units are “movable dwellings” as defined by the Local Government Act – modular units not “movable dwellings” – modular units are “buildings” requiring approval pursuant to the Environmental Planning and Assessment Act 1979 (the EPA Act) – no approval given for “buildings” pursuant to the EPA Act – development consent invalid on this ground.
JUDICIAL REVIEW – ground 2 – provision in local environmental plan sets three criteria mandated to be satisfied for stormwater disposal from the site –consent authority considered and was satisfied as to one of the three mandatory provisions – no evidence the consent authority considered two of the mandatory provisions ‑ required state of satisfaction not demonstrated concerning two mandatory stormwater criteria – failure to consider and reach required state of satisfaction of mandated criteria renders development consent invalid – appropriate to make declaration development consent invalid on this ground.
JUDICIAL REVIEW – ground 3 – local environmental plan requires that consent authority be satisfied as to availability of services – requirement that services are or will be available – satisfaction of the deferred commencement condition ensures mandated service (access to sewer for effluent disposal) will be available for issue of construction/occupation certificate – consent authority imposes deferred condition of consent ‑ deferred commencement condition permits consent authority to reach mandated conclusion that sewage service will be available – mandatory prerequisite satisfied – challenge based on availability of sewage services rejected.
DISCRETION – parties agree questions of relief to be deferred to future hearing if invalidity established – directions to be given to set date of and timetable for separate hearing on relief as a result of invalidity of development consent.
COSTS – costs to be addressed at hearing on exercise of discretion.
Blayney Local Environmental Plan 2012; Environmental Planning and Assessment Act 1979; Local Government Act 1919; Local Government Act 1993; Local Government (Manufactured Home Estates, Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation 2005; Local Government (Manufactured Home Estates, Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation 2021.
GFM Investment Group Pty Ltd in its capacity as Trustee for GFM Home Trust Subtrust No. 7 v Inner West Council  NSWLEC 1112
DEVELOPMENT APPLICATIONS – two development applications associated with regionally significant mixed use development – site specific planning controls – early works development application for demolition, tree removal, site establishment works – main works development application for demolition, excavation, remediation, construction including adaptive reuse of existing industrial buildings and three new buildings and new open space areas – design excellence – need for balconies within proposed studios and one-bedroom apartments – visual massing of new building and whether appropriate transition to adjacent low density residential development – lay objections.
Contaminated Land Management Act 1997; Environmental Planning and Assessment Act 1979; Inner West Local Environmental Plan 2022; Land and Environment Court Act 1979; Marrickville Local Environmental Plan 2011; State Environmental Planning Policy (Affordable Rental Housing) 2009; State Environmental Planning Policy (Resilience and Hazards) 2021; State Environmental Planning Policy (Transport and Infrastructure) 2021.
Sixjay Newport Pty Ltd v Northern Beaches Council  NSWLEC 1109
DEVELOPMENT APPLICATION – residential flat building – consistency with character – existing use rights.
Environmental Planning and Assessment Act 1979; Environmental Planning and Assessment Regulation 2000; Pittwater Local Environmental Plan 2014; State Environmental Planning Policy (Resilience and Hazards) 2021; State Environmental Planning Policy No. 65 – Design Quality of Residential Apartment Development.
Awelf Construction Pty Ltd v City of Parramatta Council  NSWLEC 1108
DEVELOPMENT APPLICATION: residential flat building in R4 High Density Residential zone – whether proposed development exhibits design excellence – satisfactory arrangements for designated state infrastructure – public submissions are considered.
Architects Act 2003; Environmental Planning and Assessment Act 1979; Environmental Planning and Assessment Regulation 2000; Parramatta Local Environmental Plan 2011; State Environmental Planning Policy (Biodiversity and Conservation) 2021; State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004; State Environmental Planning Policy (Resilience and Hazards) 2021; State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development; Water Management Act 2000.
Regulations and other miscellaneous instruments
Heavy Vehicle (Vehicle Standards) National Amendment Regulation 2023 – published LW 17 March 2023
Environmental planning instruments
Ku-ring-gai Local Environmental Plan 2015 (Amendment No 33) – published LW 17 March 2023
Port Macquarie-Hastings Local Environmental Plan 2011 (Map Amendment No 3) – published LW 17 March 2023
Cabonne Local Environmental Plan 2012 (Map Amendment No 1) – published LW 10 March 2023
Coffs Harbour Local Environmental Plan 2013 (Amendment No 30) – published LW 10 March 2023
Cumberland Local Environmental Plan 2021 (Map Amendment No 3) – published LW 10 March 2023
Family Law Act 1975 17/03/2023 – Act No. 53 of 1975 as amended
Fair Work (Registered Organisations) Act 2009 14/03/2023 – Act No. 86 of 1988 as amended
Fair Work Act 2009 10/03/2023 – Act No. 28 of 2009 as amended
DisabilityCare Australia Fund Act 2013 10/03/2023 – Act No. 37 of 2013 as amended
Medical Research Future Fund Act 2015 09/03/2023 – Act No. 116 of 2015 as amended
Future Drought Fund Act 2019 09/03/2023 – Act No. 55 of 2019 as amended
Fair Work Amendment (Right to Disconnect) Bill 2023 21 March 2023
Education Legislation Amendment (Startup Year and Other Measures) Bill 2023 10 March 2023
Ending Native Forest Logging Bill 2023 09 March 2023
Improving Access to Medicinal Cannabis Bill 2023 09 March 2023
National Health Amendment (Effect of Prosecution – Approved Pharmacist Corporations) Bill 2023 09 March 2023
National Vocational Education and Training Regulator (Data Streamlining) Amendment Bill 2023 09 March 2023
Social Security (Administration) Amendment (Income Management Reform) Bill 2023 09 March 2023
Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023 09 March 2023
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.