Companies failing to disclose this information are likely to have regulatory enforcement action against them, with proceedings commenced by shareholders, activists or regulatory authorities.
To mitigate risk, directors should familiarise themselves with the legal requirements associated with corporate climate change responsibility and then develop an appropriate response. Relevantly, ASIC issued Information Sheet 271 to assist directors on the avoidance of greenwashing.
Case example: Abrahams v Commonwealth Bank of Australia NSD 864 /2021.
In August 2021, Guy and Kim Abrahams (Abrahams), as trustees of the Abrahams Family Trust, filed proceedings in the Federal Court seeking access to bank documents relating to the bank’s involvement in oil and gas projects in the US and Australia that may infringe the bank’s published Environmental and Social Framework and Environmental and Social Policy.
In these policies, the bank committed to carry out an assessment of the environmental, social and economic impacts of such projects. Abrahams was concerned as to whether the actions of the bank were in line with the goals of the Paris Agreement.
In November 2021, orders were entered by consent for the Commonwealth Bank to provide documents for inspection. The consent order made by the court provided that the agreed documents were to be provided in two tranches on 9 December 2021 and 10 February 2022. If the documents produced did not satisfy the concerns of the plaintiffs, they had the right to approach the court for production of the balance of the documents sought in the original application. The matter was listed on March 10 for a management hearing. As we learn more, we will keep our readers informed.
