Speaking at the Centre for Policy Development in November, Mr Hayne noted that directors who failed to account for climate-related risk might be failing to act in the best interests of the company and its shareholders.
“Directors have their duties; there are clear statements of what those duties require; regulators have said plainly that they expect the duties to be performed,” Mr Hayne said.
“What is there left to debate?”
Mr Hayne attributed the failure of directors to implement appropriate climate policies to “learned helplessness”.
“A response often seen in Australian political discourse is that ‘The issue is large; Australia is comparatively small; nothing we do will affect the outcome if the big emitters do not act,’” Mr Hayne said.
“Boards will reinforce that sense of helplessness if they put climate risk into a bucket marked “non-financial risks”. And boards might think that they can do that if they see the risk as not being immediately realised in the next financial period.”
Mr Hayne also noted that this approach benefits those who see climate change as “a matter of belief or ideology” and warned that companies needed to look beyond the short term.
“At the national level short-termism is expressed as: ‘Doing something now will have adverse effects on employment in some part or parts of the country. That would be bad for the national economy. Therefore, we will do nothing,’” he said.
Companies that hadn’t considered long-term risks had suffered “very large financial and non-financial losses”.
Mr Hayne said that in order to address climate-related risk, boards needed to recognise the nature and extent of the risks and the speed with which the company will need to make changes.
He also called upon companies to develop strategic response plans and report to shareholders and the wider market about their plans to combat climate-related risk.
