Climate change and its impacts on business and the global economy is an existential consideration for governments, regulators, investors and businesses alike. This is especially so for the aquaculture sector which faces profound risks due to a changing climate and regulatory landscape. Increasingly, innovative companies are assessing the risk of climate change on their businesses and developing strategies to both minimise impacts and to identify opportunities.
Regulators are also responding by requiring an increasing level of disclosure regarding climate change risks. Governments are reporting their National Determined Contributions to meet their Paris Agreement commitments of limiting global warming to 1.5?. Under Australian Corporations Law, directors who ignore climate risk could be guilty of breaching their duty of care. The Australian Stock Exchange’s (ASX’s) 4th edition of Corporate Governance Principles and Recommendations requires companies to disclose risks associated with environmental risks that are material to them which include climate change, and if not, to explain why they have elected not to make such a disclosure.
In December 2022, the Australian Treasury released its Climate-Related Financial Disclosure Consultation Paper for public engagement on the design and implementation of standardised, internationally-aligned requirements for the disclosure of climate-related financial risks. The Paper proposed that reporting would initially align with the recommendations of the Taskforce on Climate Related Financial Disclosures ("TCFD"), later transitioning to align with the climate disclosure standards currently being developed by the International Sustainability Standards Board ("ISSB") when they become available for jurisdictional adoption.
The TCFD provides guidance on the way in which companies should identify, assess and manage climate-related risks and opportunities. The TCFD Recommendations have been endorsed by several peak financial bodies and regulators, including the Reserve Bank of Australia (RBA), the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the ASX Corporate Governance Committee and the Australian Accounting Standard Board.
The Australian Aquaculture sector will need to consider how to respond to these various reporting requirements and guidelines to allow sufficient time for the collection of data and the drafting of disclosures to meet the disclosure requirements.
This study provides:
With the climate disclosure reforms on the horizon, it is crucial for Australian aquaculture companies to assess their current reporting practices and frameworks to determine their readiness to disclose climate-related risks based on the TCFD framework (if not already implemented) and eventually the standards set forth by the ISSB. Additionally, it is recommended that companies and their directors and officers evaluate their internal and external audit, assurance, and verification capabilities to ensure compliance. By taking these measures, Australian aquaculture companies can effectively address climate-related risks and improve their transparency and accountability to stakeholders.