The pressure on large companies to disclose their carbon emissions and plans to counter climate change is growing around the world. In Australia, the chairman of the Australian Securities & Investment Commission (ASIC), Joe Longo, has this week given his support to moves for compulsory disclosure on climate change by publicly traded entities in Australia.
Last year, the federal government released a paper on mandatory climate change disclosures for large businesses and financial institutions. With ASIC's backing, it now seems likely that mandatory reporting requirements will come into place in Australia.
Companies with parent groups in Europe are typically ahead of the curve with respect to climate disclosure requirements, however many companies are likely unprepared for more rigorous reporting standards and risk providing false or misleading information to the market. With respect to climate disclosure, this provision of misleading information has been termed 'green-washing' by the media, and has lead to boycotts and reputation harm for several companies.
This is a topic of interest not limited to Australia; the US Securities and Exchange Commission is considering the introduction of mandatory reporting requirements for all companies listed in the US.
The move towards mandatory disclosure raises the question of the development of global standards on reporting. Several groups and frameworks have been established to try and resolve these questions, though no single entity has got the clear mandate.
At the AICD Governance Summit this week, Mr Longo warned directors that they should be ready for "more rigorous reporting standards" coming into place in Australia. He also made it clear that ASIC is taking a tougher look at the provision of false and misleading information by company directors and officers.
The call for mandatory disclosure on climate change by large companies is gaining momentum, both in Australia and overseas. The pressure for disclosure is growing, and companies should ensure that they are prepared for more rigorous reporting standards. This starts by having accurate data available, which can prove problematic across large multi-regional operations.
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