The Top 9 Trends From The AICD Climate Governance Forum 2024
We have moved from an age where companies 'should' act, to now where companies 'must' act
The Climate Governance Forum 2024 was held at the end of August in Sydney’s ICC, covering a broad range of climate commercial risks and opportunities, mandatory climate reporting, with a laser focus on the role Boards of Directors are required to play in to ensure they are delivering for their myriad of stakeholders.
Mandatory Climate Reporting is here: Australia is joining the global trend of climate-related financial disclosures, and companies need to prepare now. ASIC will take a pragmatic approach to enforcement, but companies must show evidence of their efforts through a Gap Analysis, at a minimum.
Gap Analysis is Critical: This is the starting point for understanding your organisation's climate footprint and identifying areas for improvement. It will also serve as evidence of your commitment to climate reporting during any regulatory audits.
Sustainability as a Commercial Opportunity: Leading companies are already demonstrating that sustainability initiatives can drive financial value, market competitiveness and leveraging economies of scale along their value chain.
Integrated Reporting: Combining financial and sustainability reporting is becoming essential for demonstrating a holistic approach to value creation.
Climate Reporting is a Director's Responsibility: Boards need to understand and actively manage climate-related risks and opportunities due to their fiduciary duties and personal liability under Chapter 2M of the Corporations Act.
Collaboration between Finance and Sustainability Teams: This is crucial for developing optimal solutions and integrating climate considerations into overall corporate strategy.
Focus on Commercial Value, not Corporate Values: To avoid any backlash, Directors must ensure sustainability efforts are aligned with the organisation's core business strategy and create tangible value.
‘Intangibles’ are Increasingly Important: Human capital, environmental factors, and other non-financial issues now have material impacts on organisations, and can no longer be left off balance sheets.
Nature-Based Solutions are Gaining Traction: The TNFD framework provides guidance for companies to assess and manage their nature-related risks as they begin exploring Biodiversity, Ecosystems and Ecosystem Services (BEES).
Australian Government Initiatives: The Nature Repair Market and focus on circularity signal a growing momentum towards sustainable practices by Australian businesses.
Overall, the forum emphasised the urgent need for Boards to direct their businesses to integrate sustainability and climate considerations into their strategies and operations. Boards play a critical role in driving this transformation, ensuring long-term value creation and mitigation of foreseeable risks.