Australian regulator: disclosing & managing climate risk is a key board duty

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– Board members in Australia have a fiduciary duty to manage climate risk.
– Disclosure failures could lead to an enforcement action from Australia’s regulator.

Given the Delaware court decision recently here in the States about Boeing’s board and their potential liability for safety, it seems appropriate to talk about board duties in the climate context. Here’s an excerpt from this Jones Day memo:

The Situation: After conducting a period of market surveillance, Australian Securities & Investments Commission (“ASIC”) Commissioner Cathie Armour recently released a statement reiterating ASIC’s expectation that disclosing and managing climate change risk is a key responsibility of directors.

The Result: ASIC identified that since its last review in 2017-2018 there has been a significant increase in the level of engagement and standards of disclosure on climate-related matters by Australian listed companies, and there is now broad-based board oversight of climate change risk in each of the companies included in the review.

Looking Ahead: Commissioner Armour’s statement is consistent with an accelerating international trend of regulators raising the standards in relation to climate-related disclosures. While ASIC is adopting a consultative approach to improving disclosure practices, serious disclosure failures could lead to enforcement action. Accordingly, boards should continue to make climate change and related disclosures a corporate governance priority.

Also see this article entitled “Directors liable for ‘greenwashing’ disclosures.”