Australian advocacy group sues Commonwealth Bank over climate change shareholder resolution

Legal action ahead of AGM by Australasian Centre for Corporate Responsibility

The Australasian Centre for Corporate Responsibility (ACCR), the Canberra-based shareholder engagement and advocacy body set up in 2013, is launching a legal action against the Commonwealth Bank of Australia for its refusal to let it file an ordinary shareholder resolution asking the bank to report annually on the level of greenhouse emissions it finances.

Commonwealth Bank has said that under Australian law it doesn’t have to put ACCR’s resolutions to shareholders. But with the help of law firm Environmental Justice Australia, ACCR has launched a test case to challenge the bank’s position, which it says will have implications for all Australian companies.

“If we win, it will make it much easier for shareholders to voice concerns about the actions of the companies they own,” the ACCR said.

Last month, ACCR put a number of shareholder resolutions to the bank asking it to report on the level of greenhouse emissions it finances. The bank put ACCR’s special resolution on its AGM agenda, but not the ordinary resolution.

In papers released before its upcoming AGM, the bank said that the special resolution filed by ACCR on greenhouse gas emissions is proposed by a group of shareholders holding approximately 0.0086% of the company’s shares and that it was not endorsed by the board of directors.

It said it was not practical to obtain information on emissions from the many thousands of organisations to which it provides financing each year and that many of them did not capture this information anyway.

Commonwealth Bank also listed a number of steps it is taking to address the challenge of climate change such as its financing support of wind, solar and hydroelectric projects; and noted that it is already subject to the Federal Government’s National Greenhouse Energy Reporting scheme, which makes it mandatory for corporations to report annually on their Australian domestic greenhouse gas emissions, energy production and energy consumption.

It recommended that shareholders vote against the resolution. The meeting is to be held on November 12 in Melbourne.A special resolution requires 75% of the shares voting to pass and amends the company constitution. An ordinary resolution only needs 50% of the votes, and says ACCR, is more appropriate for most issues.

In response, the ACCR – which has previously filed a motion on human rights and environmental damage at a company involved in a controversial Papua New Guinea mine – has decided to take the bank to court.

Felicity Millner, director of litigation at Environmental Justice Australia, said: “Taking on a powerful organisation like the Commonwealth Bank is not something to do lightly, but this case has the potential to provide a powerful tool for change in Australia. If we win this case, it will set a precedent that will apply to future AGMs of Australian companies.”

The ACCR is putting down similar resolutions on greenhouse gas emissions at the National Australia Bank, Westpac and the Australia and New Zealand Banking Group (ANZ). Their AGMs are scheduled near the end of the year, and agendas have yet to be released. The ACCR is working with the Asset Owners Disclosure Project and on its work.

Alongside the launch of its legal action, ACCR has today released a report on the big Australian banks’ exposure of unburnable carbon.

The ACCR said: “Our research shows that the ANZ and the Commonwealth have the highest level of carbon exposure and have clearly taken a very short term view of the risks.

“Indeed, assessing them by their actions rather than by their rhetoric, it would be difficult to avoid the conclusion that ANZ and CBA are run by boards who either comprise a majority of climate change deniers and/or who are gambling that there will be no public policy action forthcoming which will impact their fossil fuel exposure.”

“Westpac is the least exposed and the best prepared of the major banks. It has indicated that it will continue to strengthen disclosure on carbon risk and financed emissions over time. Westpac has agreed to distribute a statement about climate change from ACCR at its AGM.”