On
As reported in our earlier Alert, the plaintiff shareholders, commenced the action against CBA in
The Court's orders were made by consent and pursuant to section 247A of the Corporations Act, and grant the plaintiffs access to various bank documents which detail decisions by the bank to fund seven fossil fuel projects. These projects include the
The orders also extend to documents created by the bank which were provided to the bank's board of directors and executive leadership team ("ELT"), or which record decisions by the board or ELT, concerning the bank's adoption or implementation of certain ESG commitments.
Before the plaintiffs are granted access to the documents, the bank will have the opportunity to redact material that is subject to legal professional privilege, or which is commercially or financially sensitive (except to the extent that the commercially or financially sensitive information relates to the decisions made by CBA which are the subject of the orders).
Whilst a shareholder's right to apply to inspect a company's books is well-established in Australian law, the enforcement of that right for the purposes of focusing attention on corporate commitments to climate related risk is relatively novel. This case highlights an additional and, potentially very efficient, avenue by which shareholders might access material for the purpose of exploring a perceived misalignment between the company's business activities and its publicly-stated ESG commitments. These developments may lend themselves to a perceived new disclosure standard that the activist community expects to apply universally, including companies in jurisdictions without such far-reaching shareholder inspection rights.
Corporations and their officers should expect to see an increase in this type of ESG litigation in the future, particularly in relation to the environment, sustainability and climate change. Financial institutions in particular should expect an uptick in climate change focussed litigation because various international environmental rights organizations and plaintiffs' groups, encouraged by their recent successes against fossil fuel companies in courts around the world, have publicly stated their intention to use strategic litigation against financial institutions to deter the financing of fossil fuel projects and companies. Particularly given that context, this case highlights the importance of consistency between corporate actions and climate commitments, as well as alignment between public and internal documentation in relation to such matters.
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