Uniform Climate Risk Disclosure: The Catalyst to Private Sector Climate Action

William attended the UNFCCC forum. He is a Juris Doctor student at RMIT University in Melbourne. William works and volunteers at a non-government organisation that aims to ensure finance and investment is used to help solve major environmental problems like climate change. 

Abstract

Meeting the climate goals set out in the Paris Agreement will require a reallocation of capital, away from emissions-intensive activities, and towards clean, efficient alternatives. In order to optimise this reallocation, investors must understand which companies are best placed to take advantage of the opportunities posed by climate change, and which are most exposed to climate change risks.

The G20 Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) has recommended that organisations disclose information regarding the risks and opportunities they face as a result of climate change, along with their plans to manage those risks and opportunities. The recommendations were adopted by the G20 at its July 2017 summit in Hamburg, giving a clear indication as to the direction of future domestic policy in Australia.

Given climate change poses material business risks to some organisations, it is clear that some level of disclosure is already required under the Australian corporate regulatory regime. However, climate risk disclosure to this point has been far from uniform or comprehensive. Further guidance, supervision and enforcement is required to ensure climate risk disclosure is sufficient to give an accurate representation of a company’s prospects. This would enable markets to make informed investment decisions, thus driving the push towards a cleaner, more sustainable economy.

This paper identifies the immediate and longer term regulatory measures that should be implemented to ensure mandatory uniform climate risk disclosure amongst Australian companies.

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