What you need to know
- Climate change can have significant implications for the obligations of companies and their directors, even when it does not pose any direct physical risk to business activities.
- Australian regulators including ASIC and APRA are increasingly attuned to these obligations, and have been vocal in their focus and awareness of climate change and associated liability.
- Several proceedings have already been commenced in Australia in relation to climate change disclosures and company management. This trend is expected to continue.
What you need to do
- Consider whether your business has an adequate understanding of its exposure to climate risks (both physical and transitional) and ensure that your business and its directors satisfy all governance and disclosure obligations.
- Consider available regulatory guidance, including the Task Force on Climate-Related Financial Disclosures recommendations and ASIC Regulatory Guides 228 (in relation to prospectuses) and 247 (in relation to directors’ reports).
- Actively monitor updates in this area, particularly in relation to reporting and other disclosure obligations.
- Closely follow regulatory changes now that the federal election is behind us.
In the most recent Australian Institute of Company Directors’ (AICD) Director Sentiment Index, climate change was identified as the number one long-term issue that company directors want the Federal Government to address.
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