Climate change risk disclosure case goes before the Federal Court
Environmental Justice Australia has filed proceedings against the Commonwealth Bank of Australia on behalf of shareholders for failing to adequately disclose climate change risk in the bank’s 2016 annual report.
The claim was lodged in the Federal Court of Australia on behalf of longstanding CBA shareholders Guy and Kim Abrahams.
The proceeding is the first legal action by shareholders against a bank anywhere in the world that will test how public companies should disclose information about climate change risks in their annual reports.
The claim alleges that climate change risks pose material or major risks to the bank and by not disclosing the risks climate change poses to its business, CBA failed to give a true and fair view of its financial position and performance, in contravention of s 297 of the Corporations Act.
The claim also alleges that the directors’ report in the 2016 annual report inadequately disclosed climate change risks that investors reasonably required to make an informed assessment of the bank’s operations, financial position, business strategies and prospects for future financial years, as required by s 299A of the Corporations Act.
Abrahams v Commonwealth Bank of Australia also raises concerns about the risks, including reputational risks, of the Commonwealth Bank providing financial assistance or funding to Adani’s proposed Carmichael coal mine project.
The Concise Statement lodged in the Federal Court says Adani’s Carmichael project and whether it was being or would be funded by CBA is a matter of substantial controversy and concern. As such, CBA knew or ought to have known that the provision of any form of financial assistance for funding for Carmichael posed, and continues to pose, material or major risks to the bank.
The shareholders say those risks should have been disclosed in the 2016 annual report.
The shareholders seek a declaration that CBA, in failing to adequately disclose climate change risks in its 2016 annual report, contravened sections 297 and 299A of the Corporations Act.
The claim also seeks an injunction to stop the bank making the same omissions in future annual reports.
Guy and Kim Abrahams are represented by barristers Ron Merkel QC, Emrys Nekvapil and Sarah Zeleznikow.