The roadmap is a plan to establish mandatory financial disclosure on climate risk in Australia over the next few years. The plan details the actions Australian financial regulators and the Federal Government can take to build on existing work and further ensure there is clear and consistent reporting from companies, investors, banks and insurers. This reporting will produce investable disclosure and ensure financial markets can properly price and act on the physical and transitional risks of climate change.
Ethical Partners advocates for TCFD reporting with our portfolio engagements companies as we believe it provides us valuable insights into how how companies are understanding and managing their climate related risks. Furthermore, we believe that the process of undertaking a TCFD gives a company valuable insights into their own climate risk management and areas for improvement.
Ethical Partners believes mandatory TCFD-aligned disclosure in Australia is required because:
• It is critical for financial stability and investment in net zero emissions and climate resilient economic activities.
• Boards and trustee have a duty to consider material climate risks.
• Voluntary approaches have proven insufficient for transparency, consistency and comparability of disclosures for informed and efficient asset allocation.
• Governments and financial regulators around the world are moving to consider and implement mandatory TCFD reporting requirements.
• Setting clear, mandatory requirements will help provide clarity to align regulation with industry expectations and global standards, reduce existing burdens by reducing and streamlining decision making, and help cut red tape/duplication/confusion about reporting for business.
• The Alignment of reporting expectations across global jurisdictions is important for investors and companies subject to multiple regulatory frameworks.
We look forward to continuing to engage with companies and to support investor collaboration around implementing mandatory financial disclosure on climate risk.
Full press release attached
Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.