Climate in Focus: Australian corporate climate commitments steady – for now

Since our last newsletter – published shortly after the Trump administration withdrew from the Paris Agreement – corporate Australia has shown little sign of shifting course, at least yet. Macquarie remains the most prominent Australian company to exit a high-profile climate initiative, with no other significant departures being made public.

Meanwhile, Cyclone Alfred has brought climate to the forefront of the political agenda for the first time this pre-election period. The disaster has pushed the federal election into May, triggered over 63,000 insurance claims, and intensified focus on insurance markets and the need for stronger adaptation measures in flood-prone regions.

Also in this newsletter

• New climate science snapshot equips boards for transition and scenario planning.
• Mandatory climate reporting rethink in key international markets.
• Market updates: ASIC’s third greenwashing court win; Rio Tinto’s solar battery deal hailed as a ‘gamechanger’; Productivity Commission focuses on circular economy opportunity.

Corporate Australia holds on climate amid US policy shifts

Despite announcements of US climate policy reversals under the Trump administration, we have yet to see corporate Australia rolling back their climate commitments. While the Macquarie exit from the Net-Zero Banking Alliance is notable, other Australian banks and financial institutions continue to engage with voluntary climate initiatives.

In the leadup to the forthcoming Australian election, where the two major parties will take contrasting positions on climate and energy policy, a joint statement from 12 business and finance groups reaffirmed support for Australia’s net zero transition. The statement calls for climate policy stability to maintain economic confidence and competitiveness, highlighting that global GDP could be up to seven per cent higher by 2050 if emissions fall steadily to net zero, with the potential for GDP benefits reaching as high as 25 per cent by mid-century and 50 per cent by 2090.

As mandatory climate reporting kicks off in Australia, other markets review their regimes

Climate-related policy and disclosure requirements remain in flux across key international markets:

• United States: The SEC has opted not to defend its own climate disclosure rules in court, casting doubt on future regulatory oversight for climate risk reporting. Meanwhile, the proposed ‘Protect USA’ Act aims to shield US companies from compliance with the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), which requires businesses to identify and mitigate sustainability risks in their value chains.
• Europe: The European Commission has proposed the Omnibus Simplification Package to reduce regulatory burdens under the Corporate Sustainability Reporting Directive (CSRD) and other climate measures. Unlike CSDDD, which focuses on corporate due diligence, CSRD governs reporting on environmental and social impacts. The proposal, released last month, limits mandatory sustainability reporting to large companies with over 1,000 employees and €450+ million in annual turnover, while also reducing reporting requests on SMEs. It will now move through the legislative process.
• Aotearoa/New Zealand: The Ministry of Business, Innovation and Employment (MBIE) has released a discussion paper highlighting concern that current climate-related disclosure (CRD) requirements may be too costly, potentially diverting focus from climate action to compliance. The government is considering adjustments to reporting thresholds and director liability settings.
• Canada: The appointment of Mark Carney – a former central banker and climate finance leader– as Canadian PM has renewed national interest in sustainable finance. However, from 1 April, Canada will eliminate the consumer fuel price while maintaining the industrial carbon price.

The AICD’s guide to Australia’s mandatory climate reporting regime, developed in collaboration with Deloitte and MinterEllison, provides a comprehensive resource for directors navigating the local reporting requirements.

Productivity Commission urges action on Australia’s circular economy

The Productivity Commission’s interim report on the circular economy highlights Australia’s slow progress in adopting circular principles. The report identifies key opportunities across six sectors while also outlining policy challenges that hinder adoption. Barriers such as high costs, inconsistent regulations, and coordination issues persist. The Commission suggests that updated regulations, improved information sharing, and expanded product stewardship schemes could accelerate progress. Further submissions are being sought before the final report is released later this year.

The circular economy was in the spotlight at a recent AICD event, following the release of an introductory resource for boards. Speaking at the Australian Governance Summit, Professor John Thwaites FAICD urged directors to challenge their management teams: ‘More businesses are recognising the circular economy as an opportunity for value creation – not only to reduce costs but also to develop products and services that deliver a return.’ Read our article.