by Peter Castellas, Chief Executive Officer of the Carbon Market Institute.
Navigating the climate and energy space for Australian business is not easy. And for those individuals responsible for driving the agenda for their companies, the scope, relevance and importance of their work is expanding.
The corporate climate change challenge now includes; influencing corporate positioning and strategy; managing material and reputation risks; engaging and communicating meaningfully with key stakeholders; and optimising investments in energy and low carbon solutions.
And, decisions have to made in an environment where – let’s face it – the clarity of future federal climate and energy policy is, at best, opaque. There is a non-existent carbon price signal and daylight is now appearing between domestic policy settings and corporate efforts to manage the low carbon transition.
- There are some key developments underway that will also add to the importance of the role of climate change-designated company executives in the Australian market:The recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD) will require a deeper understanding of what financial markets want from disclosure to measure and respond to climate change risks.
- Australian Prudential Regulation Authority (APRA) executive board member Geoff Summerhayes in a speech earlier this year said unequivocally that climate change must be viewed as a financial risk management issue for business and that APRA would expect to see more sophisticated scenario-based analysis of climate risks at the firm level.
- A recent legal opinion highlighted that as a matter of Australian law, directors and boards must actively engage with the impacts of climate change-related risks on their operations and strategy to satisfy their duty of due care and diligence under the Corporations Act.
- The implementation of Paris Agreement commitments through rapid policy and market developments in our region (including the impending Chinese ETS), means that in the transition to a low carbon economy, the competitive environment and global landscape is changing and will impact Australia’s trade exposed economy.
In my recent interactions with many of the company executives charged with navigating this agenda, it is clear that they need a stronger support network and sophisticated, tailored advice in how to manage the increasingly complex challenges for their organisation.
We are fortunate in the Carbon Market Institute membership to have a cross-sector representation of companies focusing on how they address climate and energy issues, as well many of the country’s leading service and solution providers. CMI’s efforts will be increasingly dedicated to facilitating the knowledge exchange between member companies to ensure they have the tools, the skills, and the network to draw upon as the critical importance of their role continues to rise.
We look forward to continuing our role in working with member companies to manage risks and take advantage of the opportunities in the transition that is underway.