“It has been an eventful year thus far in the world of ESG, and in particular climate risks in Australia. Regulators have continued to target greenwashing and we’ve a seen a rise in climate-related litigation, including enforcement actions commenced by regulators.”
Hicksons Insurance, Climate & Cyber Risk Partner, Persia Navidi
has prepared a report providing an overview on the current state of ESG in Australia. Topics covered include greenwashing, greenhushing, disclosure of climate-related risks, and how these developments impact financial lines insurers.
The report covers the following:
: Regulators such as the Australian Securities Investment Commission (ASIC) have made it abundantly clear that they are targeting corporate greenwashing and have commenced three separate civil penalty proceedings this year
Disclosure of climate-related financial risks – what’s next
In June 2023, the ISSB issued two disclosure standards – IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The Australian Government has engaged in two consultations on introducing mandatory reporting of climate-related financial risks in Australia in 2024. What does this mean for Australian businesses and their insurers?
The proposed introduction of a civil penalty regime will no doubt lead to more insurance claims in time, something for D&O insurers to be cognisant of when assessing their portfolios for 2024 and beyond.
What do these developments mean for company directors and their insurers?
The following should be front of mind for company directors and their insurers:
- Insurers of companies likely to be impacted by mandatory disclosure of climate-related financial risks should be mindful of developments as to mandatory reporting in Australia as any new laws have the potential to impact many insureds (starting with larger organisations) from 2024 onwards.
- Companies and directors should have a plan for managing reporting of climate risks
- Climate risk management plans should be readily communicated with insurers to assist not only in assessing their potential exposure or risk of potential liability once mandatory disclosure laws are introduced, but also to demonstrate that they are proactively managing the risks.
- Insurers should also be aware of trends and developments that fall under the ‘S’ umbrella of ESG.
The full report can be found here
This report was first published in The D&O Diary
on 28 September 2023.
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