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On 8 August 2017, Environmental Justice Australia (EJA) filed legal proceedings with the Federal Court of Australia on behalf of two shareholders of the Commonwealth Bank of Australia (CBA) in connection with the disclosure of climate change risks by CBA in its annual report. The shareholders allege that CBA failed to:
- Give a true and fair view of its financial position and performance by not disclosing the risks that climate change poses to its business in its 2016 annual report, in contravention of section 297 of Australia's Corporations Act 2001.
- Adequately disclose climate change risks in its annual report (particularly those connected to CBA's funding of the controversial Carmichael coal mine project), which:
- investors require in order to make an informed assessment of CBA's operations, financial positon, business strategies and future prospects; and
- is required under section 299A of the Corporations Act 2001.
EJA states that the case is the first legal action by shareholders against a bank anywhere in the world that tests how public companies should disclose information on climate change risks in their annual reports.
If the shareholders receive the injunction they are seeking to stop CBA making the same omissions in future annual reports, the case will have a significant impact on corporate environmental reporting by banks and large multinationals. ClientEarth commented that this case "could signal a new trend in this type of litigation" and they suggest that "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 task force on climate-related financial disclosures (TCFD) recommendations".