Two shareholders have launched legal action against the Commonwealth Bank of Australia for allegedly failing to “adequately disclose” climate change risks.
The claim has been filed today in the Federal Court by Environmental Justice Australia on behalf of Guy and Kim Abrahams.
The case is said to be the world’s first launched by shareholders to test how companies disclose information about climate change risks in their annual reports.
The claim alleges that by not disclosing the risks climate change poses to its business in its 2016 annual report, the bank “failed to give a true and fair view of its financial position and performance, as required by the Corporations Act”.
The shareholders also claim the report “did not adequately inform investors of climate change risks”.
Mr Abrahams said: “We bought Commonwealth Bank shares more than 20 years ago as an investment in our children’s future. We are deeply concerned about the serious risks that climate change poses to the environment and society. The bank should tell investors about the risks climate change will have on its business.”
UK environmental lawyers ClientEarth believes this case against a major bank could signal a new trend in this type of litigation, with global ramifications.
Lawyer Daniel Wiseman said: “With this case, the risk of litigation over poor climate disclosure has become a clear reality for companies. It’s unsurprising that investors are demanding companies properly disclose climate change risks – particularly where these companies have clear exposure to the fossil fuel sector.
“Many other countries already have similar disclosure requirements to Australia. In the UK, the Bank of England and other financial regulators have now made clear that financial institutions like banks and insurers should be considering climate risk. To limit exposure to this sort of litigation, business leaders need to get acquainted – and quickly – with their legal duties and with emerging industry standards, like the TCFD [Taskforce on Climate-related Financial Disclosures] recommendations.”