Corporate Regulation
WHAT SHOULD BUSINESSES BE DOING IN 2019?
Although at this stage, no changes will be introduced to the existing disclosure regime in Australia to incorporate the TFCD disclosure framework, ASIC has signalled that it will be closely monitoring developments on disclosure in this area, following a number of Australian listed companies announcing an intention to report, or commence reporting over time, under the TCFD framework. In August 2019, ASIC updated its guidance on climate change related disclosure. The new guidance elaborates on how climate change risks should be incorporated into corporate documents. Importantly, the potential exposure of directors is specifically addressed and highlights that statements must be based on best available evidence at the time, have a reasonable basis and be updated if events overtake the relevant statement.
It is clear from the recent regulatory developments in corporations law that the central theme for the year for both ASIC and the ASX is ensuring good corporate culture across Australian companies. The introduction of tougher penalties will assist ASIC in its pursuit of corporate misconduct arising from poor corporate governance practices. Businesses should undertake reviews of their existing corporate governance policies, procedures and frameworks to ensure that all of their corporate law obligations are met, including in emerging areas such as climate change risks disclosure. Corporate culture will continue to be a focus by regulators and it will be increasingly important for businesses to have data and analytics to support and demonstrate the effective implementation of policies and processes. Compliance frameworks must be adapted to reflect this shift and executives must lead culture revision from the top.
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