| Key Points |
Momentum Accelerates Amid Regulatory Reform
Australia’s leading company directors and business executives have been told they must embed climate change strategy into governance, culture, and operations.1
The nation’s latest Climate Governance Forum advised members this must be done to meet the urgent challenges of climate change.3
Climate extremes ranging from billion-dollar floods to surging insurance claims were immediate and intensifying faster than projected.2
Boardrooms had to quickly meet changing regulatory and social demands, with climate resilience now a cornerstone of future activities.3
The New Standard: Mandatory Climate Disclosures
As of January 2025, large corporations and financial institutions must publish annual sustainability reports with rigorously detailed climate-related disclosures.2
This landmark step, lauded as a turning point for Australian corporate governance, moves the needle from voluntary best practices to enforceable standards, compelling directors to overhaul record-keeping and adopt forward-looking risk management.2
The legislation is being phased in across three groups, capturing more entities over three years.2
The Australian Securities and Investments Commission (ASIC) has issued guidance and a dedicated sustainability reporting portal, urging all reporting entities, including future divisions, to begin preparations, regardless of size or sector.2
Deep Integration: Governance, Culture and Capacity
Business leaders are advised to embed climate strategy into the heart of their governance frameworks.1
Boards must treat climate as a standing agenda item, formally linking executive pay, strategy, and disclosures to environmental commitments.1
Leading companies such as IAG and Stockland illustrate the approach through ESG strategies anchored in decarbonisation, circularity, and resilience.
Across the sector, directors are engaging in education sessions and scenario workshops, building capacity for risk identification and adaptive planning.1
Transparency, Collaboration, Opportunity
New standards demand a “prospectus mindset” toward disclosure, as boards must qualify climate statements and secure assurance amid fluid global benchmarks.1
National coordination will be required to shore up insurance affordability, guide tax reform, and enhance supply chain resilience.1
Experts urge boards not only to address vulnerabilities but to seek out growth opportunities, such as innovative technologies, sustainable asset portfolios, and the competitive edge delivered by high-performing green buildings.1
Transition Plans and Science-Based Action
While transition planning is not yet mandatory, it is strongly recommended that boards establish credible decarbonisation pathways and integrate them into operations, budgets, and culture.1
The pressure to rapidly decarbonise Australia’s energy grid is matched by warnings from scientists: worsening extremes and delayed emissions cuts demand rapid transformation and better stakeholder communication.1
Boardroom Steps for Immediate Action
- Prepare for mandatory disclosure: Audit current reporting, build governance capacity, and consult ASIC’s resources.2
- Integrate climate strategy: Make climate a standing board agenda item and link progress to culture and executive rewards.1
- Invest in scenario planning: Use scenario analysis to gauge risks and opportunities, engaging directors and staff in continual learning.1
- Build adaptive partnerships: Collaborate across industry and communities to maximise resilience and foster innovation.1
- Focus on transparent communication: Engage stakeholders in every step of planning and reporting.1
Resources
- AICD Climate Governance Forum 2025 – In-depth analysis and advice for business leaders on climate governance and boardroom action
- ASIC Mandatory Climate Reporting Guidelines – Regulatory expectations and steps for compliance with new disclosure rules
- Climate Governance Initiative - Are you ready to future-proof your business and reap the benefits?
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