Published: Mon, Sep 4, 2017
Type: Publication

Insights into the readiness of Australian business to disclose climate-related financial risks and opportunities

In Australia and internationally there is increased mainstream corporate momentum towards climate risk and opportunity disclosure. Understanding and disclosing climate risks and opportunities are complex.

In June 2017, the Financial Stability Board’s Task Force on Climate Related Financial Disclosure (TCFD) published a standardised international framework of recommendations to assist organisations to identify and assess how climate related impacts can and may affect the financial performance of their business.

The recommendations have been referenced within the G20 Action Plan for Growth and supported by nearly 400 global investors with over US$22 trillion in assets3, providing a clear signal to governments, business and markets that climate risks require the same level of due diligence as other significant business and financial risks.

Investors are taking notice. Financial regulatory authorities, fund managers and shareholders are asking for better information to help them understand complex climate related investment risks. Dissatisfied investors are increasingly launching shareholder resolutions and legal challenges.

Business needs to be on the front foot and Australia’s corporate culture is key for addressing climate risk, as it requires leaders to be proactive. In particular, climate risk management is now the functional responsibility of the CFO and business, if it hasn’t already, needs to adapt accordingly.

Proactive climate risk and opportunity disclosure and management will generate insights for the reappraisal of business models in view of the realities of physical impacts of climate change and the transition to a low carbon economy. Making this change will lead to more efficient markets and a more stable, resilient and sustainable economy.

Insights and guidance for Australian business on climaterelated financial risk disclosure

This report is intended to support business leaders in their response to growing disclosure requirements. It is split into the following sections:

Insights from CDP reporters looks at the current status of climate reporting in Australia.

Comparing the CDP insights to TCFD core recommendations considers how ready Australian business is to meet the disclosure requirements.

Actions for business sets out our recommended steps for preparation for disclosure, as part of the SBA CEO Guide to Climate Action series.

Our aim is to encourage CEOs, Boards of Directors and senior management to take part in disclosing climate risks and opportunities and join other businesses in making the transition to the low carbon economy.