Australia government sued by 23-year-old student over impact of climate change on investors

The class action lawsuit claims the government has misled investors by not disclosing the impact of climate risk in its exchange-traded debt

Australia remains one of the few developed nations yet to commit to net-zero emissions, risking further isolation following Joe Biden’s election

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A bucket-wheel reclaimer alongside a pile of coal at the Australian port of Newcastle. Photo: Bloomberg

Published: 12:15pm, 10 Nov 2020Updated: 2:19pm, 10 Nov 2020

The Australian government is defending a class-action lawsuit that claims it’s misleading investors by failing to disclose the impact of climate risk in its bonds.

During a growing wave of climate litigation worldwide, 23-year-old law student Kathleen O’Donnell says the Australian Office of Financial Management and the Treasury are deceiving investors by not disclosing climate change alongside other financial risks in its exchange-traded debt. She wants all marketing halted until the disclosures are made.

In the first hearing at the Federal Court in Melbourne on Tuesday, the case was adjourned after Justice Bernard Murphy ordered O’Donnell’s lawyers to detail the harm caused and fix technical issues in relation to the class action. The case will return to court in mid-2021.

The lawsuit was lodged as debt investors globally grapple with assessing the long-term effects of rising world temperatures and how much economic growth must be sacrificed for countries to adapt. Sweden’s central bank last year ditched its holdings of debt issued by Western Australia and Queensland – states that account for a chunk of Australia’s fossil fuel exports – amid increased concern about the threats posed by climate change.

“The concept that any debt issuance should consider and disclose the suite of material financial risks is not a novel one,” said Sarah Barker, head of climate risk governance at law firm Minter Ellison. “What is novel about that claim is that it is the first time that it has been litigated in a climate risk context.”

The Australian Office of Financial Management and Treasury declined to comment on the lawsuit.