It was always shaping up to be a landmark year in the climate governance landscape, writes AICD CEO Mark Rigotti MAICD.
It’s been an extremely busy time for our policy leadership team — and all the directors and members who have supported us — with major pieces of legislation coming before federal parliament and a packed schedule of events.
Thank you to all the directors and members who sit on our various policy committees, providing valuable insights and advice as we formulate policy positions and arguments.
Thank you also to those who have assisted with advocacy, informal policy inputs and nudges to regulators, politicians and bureaucrats at our roundtables and events.
The Australian director community and our Policy and Public Affairs teams have been instrumental on the new legislation and events fronts, delivering better outcomes for the director community and broader Australian community. This work is important for two main reasons:
- It allows directors to focus on what matters (less compliance, more innovation and value creation)
- This work underpins so much of what we do to educate, inform and advance the case for Australian directors.
Take continuous disclosure requirements, a core requirement of listed companies, however, Australian settings have long been a concern for the AICD. So it’s extremely good news that the federal government has decided to retain key elements of the reforms introduced to the continuous disclosure regime in 2021.
Following an independent review, the government has confirmed it will retain the fault element requiring private litigants to prove that the disclosing entity acted knowingly, recklessly or negligently.
In the interests of not just our members, but all directors and the broader Australian community, the AICD advocated strongly for the initial reforms and their retention.
It’s worth noting that the substantive continuous disclosure obligations remain untouched. Before and since the 2021 changes, the requirement for entities to immediately disclose market-sensitive information is exactly the same.
More generally, the heightened liability risks facing Australian directors and their boards are only being amplified amid an increasingly complex regulatory environment. The retained changes go to liability, not responsibility.
The introduction of a new mandatory climate reporting regime is also a perfect example. Here, too, our team — working with you — has achieved great results.
The passage of the landmark climate reporting legislation by Parliament in September marked a milestone in Australia’s transition to a decarbonised economy, providing a clear framework for organisations that are required to make climate- related disclosures.
Parliament’s acceptance of a staged approach, including a transitional relief period for liability, was a significant achievement that will incentivise fulsome disclosures. It means there’s a three-year modified liability period during which only the regulator — not private litigants — will have enforcement powers over key elements of the disclosure regime, including transition plans.
That said, we recognise the introduction of this regime represents a significant step up for a lot of Australian organisations. We are seeking to support you and the broader director community to traverse that step with various forms of educational and practical guidance.
In the absence of these elements, we were concerned that a check-box, minimum-compliance approach would emerge to protect directors and the companies they serve from hair-trigger liability. This would have been an inferior outcome for the Australian community.
Climate Governance Forum
The new mandatory climate reporting regime was one of the main agenda items at our third annual Climate Governance Forum (CGF) in August. It was great to see members attending in force, with nearly 2000 directors and senior leaders registering in person and online for the 2024 event. It shows the extent to which you, the director community, are engaged with these important and ground breaking issues.
A landmark year
It was always shaping up to be a landmark year in the climate governance landscape. This is what our combined policy successes and important events such as CGF2024 are all about — helping Australia’s business leaders and their organisations to navigate this difficult terrain and to make the most of it. In so doing, directors can help strengthen Australian society.
This article first appeared under the headline 'Policy leadership in Action’ in the October 2024 issue of Company Director magazine.
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