Why incumbents fail - and what that means for sustainability

The core assumption and focus of people who work to drive sustainability through markets – as corporate leaders, investors, NGOs or thought leaders – is that we need to convince existing companies and their shareholders that sustainability is first good for their business, and secondly, they can successfully transition to a sustainable business model.

But what if both of these are wrong? As someone who has spent over 25 years in that world, I’m starting to think they both might be. If so, it calls into question the very basis of the work literally millions of us are engaged in. So, it is at least worth a discussion!

The first point is the foundational question – that sustainability is broadly good for business. Not business as a concept, but business as specific institution.

Read the full article by Paul Gilding - “Why incumbents fail - and what that means for sustainability.”

Australian shareholders should be told of climate risk to profits, says thinktank

Australian companies need to start developing sophisticated scenario-based analyses of climate risks, and incorporating them into their business outlooks so shareholders know how climate change will affect profitability, a thinktank has said.

Businesses in Australia have been urged to incorporate climate
 risks into their outlooks so shareholders can see the potential impacts.

However, the Centre for Policy Development (CPD) said companies needed to do so in a standardised way, so investors and regulators were able to easily understand economy-wide risks to whole industries.

The progressive thinktank urged Australia’s biggest businesses to use the Paris climate agreement as the centrepiece for their scenario planning, saying it provided a credible, long-term anchor for policies that limit global warming to well below 2C.

Read the story on The Guardian by Gareth Hutchens - “Australian shareholders should be told of climate risk to profits, says thinktank."

New CBA case a warning: Step up on climate change, or we’ll see you in court

In a global first, Australian mum-and-dad shareholders Guy and Kim Abrahams have launched a case against the Commonwealth Bank, arguing that the bank has breached the law by not disclosing the risks climate change poses to its business.

“Banks, investors and super funds have a choice: step up
on climate change today and become leaders, or face
similar action as more shareholders step forward to
 take them on over their failure to act.” 

Buying their shares over 20 years ago, Guy and Kim were making “an investment in their children’s futures”. A climate-changed world of financial risk, social upheaval and environmental degradation is clearly not the future they signed up for.

Climate change is an immediate threat to the entire global financial system. This was the ominous warning that came from the Australian Prudential Regulation Authority earlier this year. And they’re taking it seriously, declaring that they’ll be stress-testing the Australian financial system to force the financial sector to do more to transition to a clean economy. They’re right to do so.

Climate change is the “tragedy of the horizon,” governor of the Bank of England Mark Carney warned in a landmark speech in Berlin last year.

“We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix”, he said.

Read John Hewson’s story in The Guardian - “New CBA case a warning: Step up on climate change, or we’ll see you in court.”

Commonwealth Bank shareholders sue over 'inadequate' disclosure of climate change risks

The embattled Commonwealth Bank is being sued by shareholders for what they say is a failure to properly disclose the risks to the business posed by climate change.

Activists unveil a banner in Sydney in May protesting coal
financing by the Commonwealth Bank. Shareholders
say the bank’s 2016 directors’ report did not
adequately inform investors of climate change risks.

The case will be the first anywhere in the world to test in court how companies are required to disclose climate change-related risks in their annual reports, and follows calls by shareholders, regulators and central banks around the world for greater clarity.

The papers were filed on Tuesday, after which the federal court will decide how the case should proceed.

The claim, brought by lawyers at Environmental Justice Australia on behalf of Commonwealth Bank shareholders Guy and Kim Abrahams, says the bank’s 2016 directors’ report did not adequately inform investors of climate change risks.

It also seeks an injunction to stop the bank making the same omissions in future annual reports.

Read Michael Slezak’s story on The Guardian - “Commonwealth Bank shareholders sue over 'inadequate' disclosure of climate change risks.”