Environmental Justice Australia has filed a case against the Commonwealth Bank of Australia for failure to report on climate change risks in its 2016 annual report. This lawsuit should set a precedent that would guide disclosure of climate change risks for all companies.
The case argues that the bank either knew or should have known that these risks represent a material threat to the bank’s financial position and that the omission of this information contravened the Corporations Act. The Act requires that a true and fair view of the financial position is provided in the annual report and that investors should be able to make an informed assessment of that financial position and future prospects.
The lawsuit provides an additional driver for companies to adopt the recommendations of the Task Force on Climate-related Financial Disclosures. These provide a standardized framework for disclosure that determines what information should be included in a business’ financial filings and how it should be presented.