23 Year Old Takes on Government
Rahni Sadler and Michael Slezak of ABC’s specialist Reporting Team on national science, technology and environment highlights the case of a 23-year-old Melbourne law student who is suing the Australian Government for failing to disclose the risk climate change poses to Australians' super and other safe investments.
The world-first case alleges the Government failed in its duty to disclose climate change's impact on the value of government bonds
The case is being led by a 23-year-old student and investor who says she did it to "protect her future"
Experts say it could open the floodgates for other litigation by tying climate change to real-world financial risk
The world-first case filed in the Federal Court alleges the Government, as well as two government officials, failed in a duty to disclose how climate change would impact the value of government bonds.
Katta O'Donnell, the head litigant for the class action suit, said she hoped the case would change the way Australia handled climate change.
"I'm suing the Government because I'm 23 [and] I think I need to be aware of the risks to my money and to the whole of society and the Australian economy," Ms O'Donnell said.
"I think the Government needs to stop keeping us in the dark so we can be aware of the risks that we're all faced with."Experts say it is the first where a national government has been sued for its lack of transparency on climate risks.
Experts say the drought and the threat of bushfires in Australia exposes the Government
to more financial risk compared to other countries.(ABC News: Jordan Hayne)
Bonds, Shares & Safety
Bonds are similar to shares, but instead of investing in companies, the investor lends a government money to build infrastructure and fund critical services such as health, welfare and national security.
Ms O'Donnell, who has invested in bonds independently from her super, said she did it to "protect her future".
However bonds, like shares, can lose value if they become less attractive to the market. This can occur if investors question a government's ability to repay them due to rising government debt, ethical or reputational reasons.
Ms O'Donnell said watching the impact of bushfires in Australia made her worry about the value of her bonds.
Government’s Failure to Disclose Risks
Despite the Government not disclosing climate-related risks to its investment products, government regulators are increasingly forcing companies to disclose how climate change will impact their shareholders.
"We allege that the Government is misleading and deceiving investors by not telling them about the risks," Mr Barnden said. "We don't see any disclosure to investors about the risks that climate change poses to bonds and to society as a whole. So it certainly appears as though there is a double standard."
Ms O'Donnell's case names the Commonwealth, as well as the secretary to the Department of Treasury and the chief executive of the Australian Office of Financial Management — both of whom are alleged to be responsible for promoting government bond
It does not seek damages, but instead a declaration that the Government and those two officials breached their duty.
It also seeks an injunction, forcing the Government to stop promoting bonds until it updates its disclosure information to include information about Australia's climate change risks.
A spokesman for the Australian Government Treasury said it did not comment on matters concerning current court proceedings.
According to University of Melbourne Professor Jaqueline Peel, Australia is a "hotspot" for climate litigation. "We have around 90 or so cases so far, stretching back to the 1990s," Professor Peel, who has published extensively on the topic, said.
Global warming is already changing the world before our eyes — let's see what has happened in your lifetime.
Most super funds have a significant portion of the public's money invested in them, with a fixed interest rate. But they are often also tradeable and if demand drops it could lower the value of the bonds, impacting investors, including super funds here.Former NAB chief economist Rob Henderson said Australians needed to consider the impact of climate change."Australian government bonds are significantly more exposed [to climate change] than some other countries," Mr Henderson said.Mr Henderson said Australian government bonds could be impacted by physical impacts of climate change, like bushfires, which forced governments to spend money.Or they could be impacted by "reputational risks" of climate change, as investors around the world avoided bonds from polluting countries.
Most super funds have a significant portion of the public's money invested in them, with a fixed interest rate. But they are often also tradeable and if demand drops it could lower the value of the bonds, impacting investors, including super funds here.
Former NAB chief economist Rob Henderson said Australians needed to consider the impact of climate change."Australian government bonds are significantly more exposed [to climate change] than some other countries," Mr Henderson said.
Mr Henderson said Australian government bonds could be impacted by physical impacts of climate change, like bushfires, which forced governments to spend money.Or they could be impacted by "reputational risks" of climate change, as investors around the world avoided bonds from polluting countries.
Sweden's central bank has already divested from Western Australian government and Queensland government bonds because of climate change. In November 2019, the deputy governor of the Swedish central bank, Martin Floden, said it was dumping those bonds, as well as bonds from the oil-rich Canadian province of Alberta.
"Australia and Canada are countries that are not known for good climate work," he said.
The move was described by former Liberal MP Bronwyn Bishop as a form of "protectionism".Mr Henderson said he was surprised a case like this had not been brought before.
"It's not clear to me why already the Government is not putting those risks on the table and telling us what they're going to do about them."
A pocket guide to climate change
If you need a climate science refresher, we've got you sorted with this pocket guide to climate change.
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