After securing amendments to the government’s Financial Market Infrastructure Bill to require large Australian companies to report against both 1.5 degree and catastrophic warming scenarios the Greens will support the legislation.
The changes to the Bill will also mean the Parliament retains oversight of ASX ownership and not just leave this decision solely with the Treasurer of the day.
The 1.5 degree scenario will test a company’s transition risk, where companies are too slow to respond to the transition, with quickly changing markets and government policy leaving a company’s assets or business model stranded.
The 2.5 degrees or more of warming scenario will test physical risk, which is the damage inflicted by natural disasters turbocharged by coal, oil and gas heating up our planet.
A company or super fund will have to examine how their business or their assets will be affected in a warmed world. For instance if critical public infrastructure they use to get their goods or services to market is destroyed or rendered inoperable.
The existing oversight of the Parliament to disallow a Treasurer’s approval where a company takes an ownership stake greater than 20% of the Australian Stock Exchange Ltd will remain in place.
As stated by Senator Nick McKim
“The planet is currently on track for a terrifying 2.5 to 3 degrees of warming by the turn of the century, so requiring companies to test how their businesses will cope in this transformed world will lead to better decision-making and planning.
Better climate risk reporting means investors are better informed and empowered to support climate-smart businesses and pull their money out of companies which have no future in a zero emissions economy.
As the Liberal and Labor parties commit to expanding coal and gas and making the climate crisis worse, these amendments will focus the minds of company boards on how to deal with the consequences of these decisions by the government and their coal and gas donors.
Getting these stress-tests into legislation means a future climate-denying government can’t unwind these requirements in a radioactive pursuit of cutting red tape.”
