The Investor Group on Climate Change (IGCC)’s new report outlines a plan over the next four years that would “help cut red tape for business and protect national economic stability”.
Three key steps, developed by IGCC, CDP and the Principles for Responsible Investments, to adopt mandatory climate disclosure by 2024 include:
- The Australian Prudential Regulatory Authority, Australian Securities and Investments Commission, Commonwealth Treasury and the ASX Corporate Governance Council issuing strengthened guidance and taking other regulatory and legislative steps to establish a clear TCFD-aligned mandatory disclosure signal to market participants.
- Progressively extend coverage across all major financial institutions and companies over time, starting with the ASX 300 and large unlisted entities as a priority.
- Increasing the minimum expectations for climate-related reporting over time through the regime on issues like scenario use and reporting metrics, backed by additional regulator guidance on specific aspects and ongoing review.
“Effective disclosure is critical to managing the systemic financial risks associated with climate change,” the report read.
“Credible climate risk disclosures are important for investors in managing long-term financial risk by ensuring sufficient data and information is available for them to effectively and efficiently manage and price climate risks across their portfolios.
“It is also a central tool for regulators to inform monetary policy, supervision and financial stability, by improving visibility of the system-wide implications of decarbonisation and climate change itself. It is not just another tick box requirement for investors and companies.”
The report comes only weeks after 457 investors, managing more than US$41 trillion in assets, called for mandatory climate-related financial reporting.
