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NFP Launches Legal Action Against Big-4 Bank


Wednesday, 22nd October 2014 at 10:16 am
Lina Caneva, Editor
Newly-established corporate democracy Not for Profit, the Australasian Centre for Corporate Responsibility (ACCR) has launched legal action against the Commonwealth Bank over a shareholder resolution on climate risk.

Wednesday, 22nd October 2014
at 10:16 am
Lina Caneva, Editor


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NFP Launches Legal Action Against Big-4 Bank
Wednesday, 22nd October 2014 at 10:16 am

Newly-established corporate democracy Not for Profit, the Australasian Centre for Corporate Responsibility (ACCR) has launched legal action against the Commonwealth Bank over a shareholder resolution on climate risk.

The court challenge is being supported by lawyers from Environmental Justice Australia.

ACCR said it put a number of shareholder resolutions to CBA in September asking the bank to report on the climate risk it faces.  

“CBA responded by putting the special resolution on its AGM agenda but refused to put the ordinary resolution,” ACCR said in a statement.

A special resolution requires 75 per cent of the shares voting to pass and amends the company constitution.  An ordinary resolution only needs 50 per cent of the votes and for most issues would be appropriate.

“The bank believes Australian law doesn’t require them to do this – but we think they’re wrong. If we win this case, it will set a precedent that will apply to future AGMs of Australian companies,” Director of Litigation at Environmental Justice Australia, Felicity Milner said.

The legal action has been launched in the Federal Court and is listed for a Directions hearing on 28 November.

“This is an important test case, with 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," Milner 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.

“Corporations are among the most powerful institutions in the world, and their power is growing.

“Voters can hold Governments to account, but there are only limited ways that shareholders can hold corporations to account. But if we win this case, it will provide shareholders with an important tool to create a better world.

“Our client, the Australasian Centre for Corporate Responsibility, has tried to put a shareholder resolution to the AGM of Commonwealth Bank, asking it to report on the amount of climate change causing carbon pollution it finances.

“Corporate democracy is an important part of responsible corporate governance in most developed countries. Australia is far behind the rest of the world in recognising shareholder rights.

“The US, for example, has a strong culture of shareholder engagement, and this has long been an effective way for concerned shareholders to change the way a company does business.

“Resolutions on issues from climate change to child sex trafficking have been considered by company general meetings in the US. Even when a majority of shareholders do not support the particular resolutions, companies will often change their practices in response to the continued public pressure brought about by the shareholder resolutions,” Milner said.

The current legal action coincides with the release of the ACCR research report into ‘Financed emissions, ‘unburnable carbon’ risk and the major Australian banks’.

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

“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.

“The top four Australian banks all ‘have a policy’ recognising the significant impact of climate change. Oddly, little detail is readily available to the bank’s shareholders quantifying the practical implications of this recognition.

“This paper assesses three sources of exposure of the top four Australian banks to ‘unburnable carbon risk’ resulting from each bank’s own ‘financed emissions’ – emissions attributable to businesses they part own or lend to,” the report said.

The ACCR was established in May 2013.

Co-founder Howard Pender said at the 2013 launch event that shareholders can have considerable power and the organisation planned to help them discover it.

‘It’s not always right to pass the buck to the Government. Shareholders can put their mouth where their money is by speaking directly to the boards of companies they hold shares in,” Pender said.

World Vision chief, Tim Costello was in Canberra to help launch the ACCR.

‘What I love about the newly-established ACCR is that it will provide (shareholders) with a completely different opportunity to make a positive contribution by persuading the companies in their portfolios to work with us, not against us,” Costello said.

Pender, who has had 25 years  experience in the ethical investment arena in Australia, and his co founder, Robert Howell say they have long admired the work of the Interfaith Centre for Corporate (ICCR) Responsibility in the US.

“The ICCR has, for over 40 years, researched, advocated and lobbied, using direct engagement with companies and collective shareholder power. Its reputation for integrity is such that it even boasts US state governments among its members,” Pender said.

“It is, for instance, no small achievement that ICCR members’ actions led to Exxon Mobile ceasing their funding of global warming deniers.

“In Australia the ACCR will, similarly, become a respected vehicle for the exercise of citizen power. It can become just as important as the casting of a vote in a democratic election.”

Howell said the ACCR aims to promote ethical investment and in particular, shareholder engagement and advocacy with the aim that corporate activity assists humanity live more justly and within the capacity of supporting ecosystems.


Lina Caneva  |  Editor |  @ProBonoNews

Lina Caneva has been a journalist for more than 35 years, and Editor of Pro Bono Australia News since it was founded in 2000.

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