Statement on the Senate Carbon Disclosure Inquiry Statement

Apr 26, 2017 - 3:05pm

The Climate Institute welcomes recommendations from the Senate Standing Committee on Economics into Carbon Risk Disclosure.

The recommendations, if adopted, would broadly assist in ensuring Australia’s corporate and financial sectors are able to make the needed transitions towards a zero-carbon economy in as smooth and orderly a manner as possible.

“The investment world is increasingly seeking clarity on climate change-related risks. These risks - and related opportunities - need to be disclosed in a clear and consistent way,” said Kate Mackenzie, head of finance and investment at The Climate Institute.

“Many good voluntary disclosure initiatives exist, but without a consistent approach, there are risks of a poor outcome for individuals. Currently, corporations and financial actors risk being penalised for good disclosure. Climate change will continue to affect many aspects of society and our economy; so transparency around the business and financial implications will be essential.”

The Committee’s recommendations are also in line with The Climate Institute’s view, based on years of industry engagement and research, that uncertainty over the direction of climate change policy is a barrier to investment decisions being taken, which can negatively impact the broader economy. Analysis by the Energy Council of Australia, for example, found that policy uncertainty has led to steep electricity price rises, equivalent to a carbon price of over $50 a tonne.

For media inquiries:
Brinsley Marlay ● Media & Communications Manager ● 0422 140 555

RECOMMENDATIONS

Recommendation 1
4.30 That the Australian Securities and Investments Commission review its guidance to directors to ensure that it provides a proper understanding of the manifestations of carbon risk, and reflects evolving asset measurement implications of carbon risk.

Recommendation 2
4.33 That the Australian Stock Exchange provide guidance regarding the circumstances in which a listed entity's exposure to carbon risk requires disclosure under Recommendation 7.4 of the Australian Stock Exchange Corporate Governance Principles and Recommendations.

Recommendation 3
4.37 That the government nominate a single government entity to have primary responsibility for coordinating the response to the recommendations of the Financial Stability Board Task Force on Climate-related Financial Disclosures.

Recommendation 4
4.38 That the government commit to implementing the recommendations of the Financial Stability Board Task Force on Climate-related Financial Disclosures where appropriate, and undertaking the necessary law reform to give them effect.

Recommendation 5
4.42 That the government review the Corporations Act 2001 to consider whether the obligations for financial disclosure should require holistic consideration of a company's prospects, including the viability of its business model.

Recommendation 6
4.50 That the government end the uncertainty regarding climate change policy, and develop a stable and consistent policy (such as an emissions intensity scheme for the electricity sector).

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