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Australians Listed companies should to the climate-related disclosure obligations

Friday 17 December 2021

The Australian Securities and Investments Commission (ASIC) is calling on Australian Listed companies to follow the Taskforce on Climate-Related Financial Disclosures (TFCD) recommendations.

This comes more than a month after the announcement the at the Conference of Parties (COP) the that the International Sustainability  Standards Board (ISSB) would be established.

On the establishment of ISSB ASIC Commissioner Cathie Amour said in an official statement this week, “The establishment of the ISSB is a major step in setting global sustainability standards and addressing climate risk. ASIC supports the ISSB giving priority to a standard on climate-related disclosures. Consistent, comparable and relevant information is critical to fully informed decisions by investors”

The ISSB will be working closely with the International Accounting Standards Board (IASB).

The securities regulator said, “ASIC will continue to closely monitor developments in climate and sustainability reporting in Australia and internationally. We will consult with stakeholders to better understand the practical implications of international developments on Australian listed companies and developing disclosure practices in Australia. We will provide further updates as ISSB standards develop.”

This comes less than  a month after the Australian Prudential Regulation Authority published  
prudential guidance on managing the financial risks of climate change.
International Financial  Reporting Standards (IFRS) Foundation Trustee Lucrezia Reichlin laid out the four strategic directions for the new international standards stetting body in presentation this the week:

  • Investor focus
  • Build Existing Frameworks
  • Global Baseline
  • Sustainability, Scope, starting with climate  
“The Process that the led to the creation of the ISSB started with public consultation in September 2020. The feedback of the consultation shows a clear demand for global standard for company sustainability-related disclosure to meet investors’ needs and the broad support for the foundation to play a role in developing such standards.”

Reichlin added that, “The message was clear and loud there are too many sustainability standards, often inconsistent, and the lack of comparability and assurability may have led to greenwashing.”
ASIC Recommendations
Recommendations from the securities regulator as published on their website and
Report 593 Climate risk disclosure by Australia’s listed companies.

  • Consider climate risk - directors and management of listed companies should understand and continually reassess existing and emerging risks, including climate risk
  • Develop and maintain strong and effective corporate governance - strong corporate governance facilitates identifying and managing material risks
  • Comply with the law – directors should consider disclosure of material business risks affecting future prospects in an OFR, and
  • Disclose useful information to investors – directors of listed companies with material exposure to climate risk should consider reporting voluntarily under the TCFD framework.