[Our company’s value is sensitive to climate change]
Our company states it “is exposed to a range of transition risks that could affect the execution of our strategy or our operational efficiency, asset values and growth options, resulting in a material adverse impact on our financial performance, share price or reputation, including litigation. The complex and pervasive nature of climate change means transition risks are interconnected with and may amplify our other risk factors”.27 Changing weather patterns and more extreme weather events, driven by climate change, also directly confront our company’s business operations.

[Consistent with investor expectations]
In 2020, investor groups representing over US$103 trillion AUM globally issued a letter seeking that companies reflect climate-related risks in financial reporting.30 Subsequently, the Institutional Investors Group on Climate Change (IIGCC) outlined its ‘unequivocal’ expectation that companies and auditors will deliver ‘Paris-aligned accounts’, defined as “accounts that properly reflect the impact of getting to net zero emissions by 2050 for assets, liabilities, profit and losses”.31 IIGCC expects directors to: affirm that the Paris Agreement goals were considered in preparing the accounts; explain, in the Notes, how critical accounting judgements are consistent with NZE by 2050 (or if these assumptions are not used, why not); present results of sensitivity analysis around Paris-aligned assumptions; state any implications for dividend paying capacity of Paris-alignment. IIGCC also expects companies to account for any inconsistency between its narrative reporting on climate risks and the assumptions made in accounting. CA100+’s Net Zero Benchmark assesses whether company accounting disclosures and practices adequately reflect climate change risk, and the global movement towards NZE GHG emissions by 2050 or sooner. The CA100+ initiative – representing more than 700 global investors managing AUM $68 trillion – expects that ‘net zero aligned’ companies and auditors will provide investors with oversight of how accelerating decarbonisation, in line with the 2050 trajectory, will affect a company’s financial position and profitability.32 Some investors are already expressing their expectations around reflection of climate in company financial statements and audits in their voting decisions.

[Consistent with accounting standards]
Existing Australian and global accounting standards set an expectation that climate-related risks are integrated into financial statements. The Australian Accounting Standards Board (AASB) Practice Statement 2, Making Materiality Judgements, is clear that ‘information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity’.34 Therefore, and as the AASB/AUASB noted in 2019, investor statements on the importance of climate-related risks to their decision-making will often render these risks ‘material’ to a company, requiring them to be reflected in financial statements.35 Our company considers climate change to be ‘a material governance issue and a strategic issue’.36 In 2020, the International Financial Reporting Standards (IFRS) board issued an implementation document explaining how elements of 12 separate IFRS standards may introduce requirements to make climate disclosures in financial statements.37 Finally, if Australia develops sustainability-related reporting requirements that are aligned with the ISSB [Draft] IFRS S2 Climate-related Disclosure standard,38 the AASB has stated these will ‘supplement and complement’ information provided in financial statements.39 Consequently this shareholder resolution is a complementary extension of the anticipated sustainability standards. ACCR urges shareholders to vote for this proposal.