A 23-year-old student has filed the first ever lawsuit against the Australian government claiming that it has repeatedly failed to disclose risks related to climate change to potential investors in the country’s sovereign bonds.
Kathleen O’Donnell has claimed that investors who buy bonds from the Australian government should be told the risks that have emerged as a result of climate change, possibly making it even harder for Australia to pay back its debts.
A spokeswoman for Australia’s Treasurer claimed that the government was aware of the lawsuit and that due to it concerning “current court proceedings the government will not make any comment.”
The lawsuit comes after a global call for an environmentally friendly recovery after the coronavirus pandemic, as well as plenty of investment managers claiming to try and cut down carbon emissions to zero by 2050 in their entire framework.
Climate change has dominated headlines over the past few years, and in Australia this became even more of a heated topic last summer, after intense wildfires raged on for around four months over several parts of the country.
The wildfires killed 33 people and millions of animals, as well as destroying several habitats that shocked the ecosystem even more.
The statement filed with the Federal Court of Australia in Victoria read that the country is “materially exposed and susceptible”.
It also added that “those risks are material to an investor’s decision to trade in exchange-traded Australian government bonds” and that “an investor is entitled to be informed of those risks.”
O’Donnell is also seeking declaration that the government did not follow its duty of disclosure as well as an injunction restraining further promotion of such government bonds until it complies with the allegations.
Currently, Australia has more than A$600 billion (€371.8 billion) of sovereign bonds on issue, having a prestigious ‘AAA’ rating from the main three ratings agencies.
Whilst Australia only contributes 1.3% of the world’s carbon emissions, it is the second-largest emitter per capita, only behind the United States.
Additionally, it is also the leading exporter of coal, one of the most polluting fossil fuels available.
Over the last few yours, climate change-related discussions have become more prominent, as stake holders expect better transparency and clarity on such climate risks.
Globally, several financial authorities are encouraging banks to improve their transparency on exposure to climate-change risks, mainly arguing that discussions regarding climate exposure are a must for market participants, something that O’Donnell makes reference to in her lawsuit.
The statement said that the Commonwealth government has the “duty of utmost candour and honesty to investors”.