This case was filed on 22 July 2020 and is significant as it is a first for Australia, specifically tackling disclosure obligations in relation to climate change and the investments of government bonds. There are now thousands of climate related cases in the various courts around the world.
Climate Laws lists 99 climate related cases in Australia, many connected with mining and land development applications as they relate to climate impacts, present or future. On the broad matter of a government's role in protecting its citizens, in Australia, you cannot constitutionally hold the government to a duty of care for looking after its citizens, but suing them over the management of your investments in bonds is another matter. Katta O'Donnell's claim alleges that
"AUSTRALIA’S ECONOMY AND THE NATION’S REPUTATION IN INTERNATIONAL FINANCIAL MARKETS WILL BE SIGNIFICANTLY AFFECTED BY THE ADEQUACY OF THE AUSTRALIAN GOVERNMENT’S RESPONSE TO CLIMATE CHANGE.
AS A RESULT, INVESTORS WHO TRADE IN AUSTRALIAN GOVERNMENT BONDS FACE MATERIAL RISKS FROM CLIMATE CHANGE. THE CLAIM ALLEGES THAT RISKS ARISING FROM CLIMATE CHANGE SHOULD BE DISCLOSED TO INVESTORS."
And on at least one significant occasion, Australian bonds have been dumped because of their role in climate change. In November 2019, the Swedish Central Bank, Sveriges Riksbank, sold debt from Queensland and Western Australia along with the Canadian province of Alberta from its portfolio of foreign exchange reserves. The Riksbank held 8 percent of it's foreign country reserves in the three states and has sold them, despite the relatively high yields. The bank's deputy governor Martin Floden said at the time:"UNDER A NEW POLICY THE CENTRAL BANK WILL NOT INVEST IN ASSETS ISSUED BY ISSUERS WITH A LARGE CLIMATE FOOTPRINT. AUSTRALIA AND CANADA ARE COUNTRIES THAT ARE NOT KNOWN FOR GOOD CLIMATE WORK."
Australia's GHG footprint leads the world and it's mostly related to our use of coal, coal mining and coal exports.
Katta O'Donnell is represented by Equity Generation Lawyers and the full claim is on their website O'Donnell v Commonwealth. Equity Generation Lawyers also represent Mark McVeigh who took REST Super the Supreme Court about the fiduciary duties of pension fund trustees and climate change. The case has been ongoing since August 2017.
Climate risk investment is also increasingly being given a swerve by global funds managers, Blackrock who have $7 trillion funds under management and Investor Group on Climate Change which has AUD$50 trillion funds under management. The Global Investor Group requested that governments “phase out thermal coal power”, “put a meaningful price on carbon” and “phase out fossil fuel subsidies.” Blackrock are divesting from any company generating more than 25% of revenue from thermal coal.
Joining many others around the world this month, the UK's NEST (National Employment Savings Trust) scheme with 9 million members began divesting of any companies involved in coal mining, arctic drilling or taking oil from tar sands, including BHP.
Image: Unsplash Leio Mclaren