By Ilona Millar and Lily Morton -
Snapshot
- As the world moves towards achieving net-zero emissions, there is growing pressure on all aspects of commercial business to measure, disclose and manage climate-related financial risks and opportunities.
- A new, highly anticipated mandatory climate-related financial disclosure regime came into effect January 1 2025.
- The regime marks a shift in the intersection of climate-related financial issues and business. It places new responsibilities on directors and legal teams to ensure compliance with the requirements.
Over the last few years, climate change has been increasingly recognised as a systemic risk to business and the global economy. Climate-related financial risks and opportunities will affect businesses across all industries and, for lawyers, clients across almost all legal disciplines. As the world moves towards achieving net-zero emissions, there is growing pressure on all aspects of commercial business, not just high-emitting sectors, to measure, disclose and manage these climate-related financial risks and opportunities.
On 17 September 2024, the Australian Government amended the Corporations Act 2001 (Cth) (‘Corporations Act’) to implement the highly anticipated mandatory climate-related financial disclosure regime in Australia. Commencing from 1 January 2025, this regime marks a significant shift in sustainability disclosure and corporate governance, placing new responsibilities on directors and legal teams to ensure compliance with the new requirements.
For legal teams (both in-house and external), now is the time to be upskilling on climate literacy by developing an understanding of how climate-related risks and opportunities may be relevant to a range of clients and stakeholders, the nuances of the climate disclosure requirements, how businesses can navigate climate-related financial risks and opportunities, and how to ensure compliance with their reporting obligations.
