Protecting (and creating) business value by addressing climate risk

  • In August 2019, ASIC incorporated requirements for climate disclosure in its rulebook.
  • Failure to consider climate-change risks or inadequately consider climate change risk exposures, may be in breach of directors’ duties of due care and diligence.
  • A standard method for companies to both assess and disclose climate risks is required.

climate change gear

In the absence of meaningful climate-change policies, investors1 are seeking insights into companies’ climate risks through the development of detailed climate-related financial disclosures.2 We see this increasingly across regulatory bodies and supported by financial institutions.3

In 2018 the Australian Securities and Investments Commission (ASIC) stated that it expects listed companies to provide meaningful and useful risk disclosure to enable investors to make fully informed decisions. In August 2019 ASIC went further. Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors and Regulatory Guide 247 Effective disclosure in an operating and financial review, which provide corporates with ASIC’s interpretation of law and practical insights on how to meet obligations under the Corporations Act, were updated with specific guidance on incorporating climate risk, as developed by the Taskforce on Climate Related Financial Disclosure (TCFD), into the examples of common risk which may need to be disclosed.

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