A 23-year-old law student in Melbourne, Australia has brought what is described as a “world-first” climate lawsuit against the Australian government for failing to disclose climate-related risks to holders of government bonds. The climate crisis poses a material financial risk to investors in Australian sovereign bonds, the lawsuit contends, and the government has a legal duty to disclose these risks.
Katta O’Donnell is the plaintiff in the lawsuit filed July 22 in the Federal Court of Australia. O’Donnell is a law student at La Trobe University and herself a holder of government bonds. According to the Guardian, O’Donnell “said young Australians owned bonds through their superannuation funds but were in the dark about government assessments of the climate risk their investment faced.” She brought the lawsuit as a class action representing other holders of government bonds, which are a type of investment of loaning money to the government. David Barnden of Equity Generation Lawyers, attorney Thomas Wood and former federal court judge Ron Merkel are the lawyers representing O’Donnell.
According to the Equity Generation Lawyers website, this case (O’Donnell v. The Commonwealth) is the “first case in the world dealing with climate as a material risk to the sovereign bond market.” The complaint says that Australia “breached its duty” by “failing to disclose any information about Australia’s Climate Change Risks.” These risks include the physical impacts of climate change like extreme weather events, financial impacts resulting from the transition away from fossil fuels, and other related economic risks in the context of a delayed response to the climate crisis.
The lawsuit seeks a court order declaring the government breached its legal duty to disclose material risks and preventing the government from further promoting sovereign bonds until it complies with its duty to disclose climate-related risks.
This is the first climate lawsuit in the world taking a national government to court over financial risks investors face as governments continue to prop up the fossil fuel sector that is driving the climate crisis. As Equity Generation Lawyers explains, “Australia’s lack of credible [climate] policies is expected to ultimately cost the economy when a sudden and disorderly transition [away from fossil fuels] occurs.”
Institutional investors and financial entities are increasingly recognizing that the climate crisis poses a systemic economic risk in Australia and around the world. The Reserve Bank of Australia, the country’s independent central bank, warned of systemic climate risks to Australia’s economy and other central banks have made similar warnings. In the U.S. a group of large investors holding almost $1 trillion in assets sent a letter to the Federal Reserve on July 21 arguing that climate change is a systemic risk to the economy and urging the adoption of climate-related risk disclosures.
As O’Donnell said, as reported by the Guardian, it is clear that climate change is a present danger and will only get more severe. “It’s time the government told the public about the impact climate change will have on our future and the economy,” she said.