Mum-and-dad shareholders backed in by the Grata Community and the legal team at Environmental Justice Australia to took on CommBank over their failure to consider the risks of climate change to their shareholdings. This action has created a big change in the financial industry and an acknowledgement that climate change is a risk to business.
Shareholders had been pushing CommBank’s to include climate change risks in its annual report. They believed that this omission was a failure of ComBank leaders to meeting their legal reporting obligations and provide a “true and fair” view of its financial position and performance because major or material risk climate poses to the business.
After years of CommBank ignoring calls from to report accurately, shareholders Grata Community chipped in to support the mum-and-dad shareholders mount a legal challenge. With the support of lawyers from Environmental Justice Australia shareholders filed a case in the Federal Court.
A week after the case was filed CommBank backed down released its Annual Report which reported risks associated with climate to shareholders.
But the impact didn’t stop there.
The result has transformed the environment the financial industry does business. This reporting means CommBank has had to re-evaluate its investment mix in high and low carbon industries across its entire portfolio, including by ensuring it hedges fossil fuel investments with significant low carbon investments.
And it doesn’t stop there. The regulators are changing too. Australia Securities and Investments Commission (ASIC) has recently updated its guidance on corporate disclosure and listed climate change as a systemic risk that could have a material impact on business. ASIC has said it must be addressed in annual reporting requirements
This case is also a step closer to directors of companies being held individually responsible for breaches of their fiduciary duties in relation to climate change risk.