June 21, 2018 Read More →

Regulators likely to require more climate risk disclosure from Australian coal firms

Australian Financial Review:

ASX-listed companies with high carbon exposures—such as Whitehaven Coal, Yancoal and New Hope Group—will have to ramp up their climate risk disclosures from the brief mentions in past financial statements.

Minter Ellison climate lawyer Sarah Barker told The Australian Financial Review that Australian Securities and Investments Commission member John Price’s speech on climate risk disclosure on Monday was “almost the final piece in the regulatory puzzle.” Ms. Barker did not comment on individual companies.

Whitehaven, Yancoal and New Hope, which are enjoying strong coal prices and Asian demand, make only cursory references to climate risk in their annual reports and barely discuss long-term implications of tougher action on climate change, which could hit Asian markets harder.

Mr. Price said ASIC believed directors of ASX companies should take a “probative and proactive” approach to assessing climate change risk, and considered “unremarkable” a 2016 legal opinion by Sydney silk Noel Hutley that directors who ignored the risk could be in breach of their duties of care and diligence. He said ASIC would vet climate disclosures of ASX 300 companies.

ASIC has previously said climate risk should be included in ASX companies’ operating and financial review if the risks are material. Mr. Price said they should go beyond strict legal requirements and consider “the general information needs of investors” and voluntary codes such the global Task Force on Climate-related Disclosures (TCFD) code.

The TCFD code requires companies with climate-related risks to stress-test their business models and pay incentive structures against all reasonably plausible scenarios over short, medium and long terms, and disclose any material adverse or positive outcomes on asset values, such as potential “stranded assets,” in their financial statements.

More: Whitehaven Coal, Yancoal, New Hope must ramp up climate disclosure

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