SYDNEY (Reuters) – A husband and wife filed a lawsuit against No. 2 Australian lender Commonwealth Bank of Australia on Tuesday accusing it of failing to disclose investment risks associated with climate change, adding to publicity headwinds for the bank.
The unprecedented lawsuit comes less than a week after a government regulator took the A$140 billion ($111 billion) bank to court for alleged breaches of anti-money-laundering rules, a case some analysts believe will lead to hefty fines.
Both legal actions will overshadow proceedings when CBA reports what is expected to be a record annual net profit on Wednesday.
The legal firm running the environmental case, Environmental Justice Australia, said it was a world first with potentially far-reaching ramifications for corporate Australia.
It was the first time shareholders of a financial services firm had sued for inadequate disclosure of investment risks associated with climate change, the firm said.
Complainants Guy and Kim Abrahams, who bought CBA shares in the 1990s, decided to sue when the bank did not agree to name climate change as an investment risk in its annual reports.
The public interest aspect to the case is quite strong (because) the consideration of climate risk for a major financial institution, let alone company, hasn't been before the courts in Australia, EJA lawyer David Barnden said.
There should be ramifications throughout the listed companies and boardrooms Australia-wide if the case were to succeed.
CBA had no immediate comment on the lawsuit.
The Abrahams' statement of claim accuses CBA of failing to give a true and fair view of the financial position and performance of its business by omitting climate risks from its financial statements.
The court must now give a date for a directions hearing.
By Byron Kaye
Published by Reuters on 8 August 2017