The Australian Securities and Investments Commission (ASIC) is working to address climate risk within the context of corporate governance.

It has begun a review to ensure regulatory guidance provides appropriate principles and high-level direction for stakeholders to apply in meeting disclosure obligations under the Corporations Act.

ASIC is also in talks with global peers about the reporting of environmental and sustainability risks, reviewing climate change-related disclosures across the ASX 300 and focusing on impairment testing and asset values in its upcoming review of financial reports.

“We continue to see, both internationally and in our own market, an increasing focus on company matters that sit outside traditional evaluative metrics and, in particular, those matters concerning the environment, sustainability and/or governance,” ASIC Commissioner John Price said.

“In terms of governance, we know from our regulatory experience that companies that have a strong culture and effective corporate governance practices are better equipped to develop and implement effective strategies to manage risks and opportunities.

“This applies to climate risk just as it does to other risks such as compliance risks, cyber security or digital disruption.”