Lawyers from Environmental Justice Australia today filed proceedings in the Federal Court on behalf of shareholders Guy and Kim Abrahams against the Commonwealth Bank of Australia for failing to adequately disclose climate change risk in the bank’s 2016 annual report.
The case is the first anywhere in the world by shareholders to test how banks should 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, 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 2016 directors’ report did not adequately inform investors of climate change risks.
The claim seeks an injunction to stop the bank making the same omissions in future annual reports.
The action raises concerns about the risks, including reputational risks, to the Commonwealth Bank regarding funding required for Adani’s proposed Carmichael coal mine project.
“We bought Commonwealth Bank shares more than 20 years ago as an investment in our children’s future,” Guy Abrahams said.
“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.”
Guy is an art consultant/valuer and CEO of not-for-profit CLIMARTE Inc. Kim is a medical practitioner.
“The Commonwealth Bank is Australia’s biggest company and should be a leader in responding to climate change and accurately reporting the risks to shareholders,” Kim Abrahams said.
Recent statements by APRA’s Geoff Summerhayes and Noel Hutley SC have confirmed that climate risks are financial risks and company directors should take them seriously.
“This case is the first of its kind to test the extent of climate change risk disclosure in annual reports,” said Environmental Justice Australia lawyer David Barnden.
“We believe the matter is of significant public interest. It should set an important precedent that will guide other companies on disclosing climate change risks.”