A legal case that will test climate reporting duties in the courts for the first time has been brought by two shareholders in Australia.
The case is against one of the country’s biggest companies, the Commonwealth Bank of Australia, on the basis that it is failing to report on the risks climate change may pose to its financial performance. They argue this disclosure is required by the Corporations Act.
The two shareholders are represented by Environmental Justice Australia, whose lawyers filed proceedings in the Federal Court today. The EJA lawyers confirmed this case could set an important precedent, while lawyers from ClientEarth note that it may set a standard worldwide.
ClientEarth lawyer Daniel Wiseman, who qualified in Australia, 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.
“Shareholders will not be content to stand by silently without reassurance that climate risk is being adequately managed. This case against a major bank could signal a new trend in this type of litigation – with global ramifications.
“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 recommendations.”