Press release – 7 August, 2017Sydney, Australia August 8, 2017: Groundbreaking shareholder litigation filed against Australia’s largest bank by its own shareholders will argue that the Commonwealth Bank have failed in their duty to disclose the risk that climate change poses to the bank.Filed today by Environmental Justice Australia on behalf of shareholders of over twenty years, Guy and Kim Abrahams, and litigated by former Federal Court judge Ron Merkel QC, the case will argue that the bank has failed in its duty to shareholders to disclose the financial and reputational risk posed by climate change.
"The Commonwealth Bank’s multi-billion-dollar exposure to fossil fuels not only poses a threat to future generations and the Great Barrier Reef, but as regulators and analysts have repeatedly warned, it also poses a risk to the Bank’s own shareholders,” Greenpeace Australia Pacific spokesperson Jonathan Moylan said.
“Projects like Adani’s Carmichael coal mine and the Newcastle coal port expansion must not continue if we have any chance of slowing climate change and meeting our targets under the Paris Accords.
“Despite a public commitment to taking action on climate change CommBank continues to pour billions of dollars into the expansion of fossil fuel projects.”
Analysis
[1] by environmental finance group Market Forces shows that the Commonwealth Bank has loaned AU$6 billion to fossil fuel companies in the last eighteen months since they publicly committed to support the goals of the Paris Agreement, representing lifetime emissions of 2.8 billion tonnes of CO2, making the Commonwealth Bank the most polluting bank of the "Big Four" Australian banks.
They are also the only remaining big four Australian bank to have not ruled out financing Adani’s coal mine in the Galilee Basin, and have operated as a transactional bank for the project.
The Commonwealth Bank are also currently facing allegations of more than 50,000 cases of failing to comply with laws relating to money laundering. These allegations are currently before the court.
“The current allegations against CommBank, if proven true, would be another example of the bank’s litany of failures it its attempts to appropriately manage risk in recent years,” Moylan said.
“Today’s filing by Environmental Justice Australia demonstrates another threat that the bank are failing to take seriously – that of climate change, which poses a serious and material risk to banks that continue to expose themselves to fossil fuel projects that would become stranded assets if the Paris targets are met.
“This case is the latest demonstration of growing public concern about financial institutions’ failure to account for climate risk. The age of coal is ending, and investments of this nature are only getting riskier.
“Commonwealth Bank investors need to know how exposed they are to these risks.”
While fourteen international banks including HSBC, Deutsche Bank and ING have adopted policies excluding new coal mines in recent years, the Commonwealth Bank has failed to do so.
Financial institutions have been repeatedly warned of the risk of litigation due to climate risk, most notably by the G20 Taskforce on Climate-Related Financial Disclosures, led by Governor of the Bank of England, Mark Carney, and by Australian Prudential Regulatory Authority director Geoff Summerhayes, who in February warned that the prudential regulator would be paying increased attention to climate risk.
NOTES FOR EDITORS:
[1] https://www.marketforces.org.au/campaigns/banks-new/twodegrees/
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