Essay by Eric Worrall
Legal penalties for greenwashing could force Aussie companies to declare their total lack of interest in climate action.
Mandatory climate reporting begins this year, marking generational change for corporate Australia
By national regional reporter Clint Jasper
In short:
Australia’s new mandatory climate reporting legislation begins this week.
The legislation requires companies to disclose their emissions and how a warming planet may impact their balance sheets.
What’s next:
Only the largest entities need to start reporting this year, but more will be captured by the legislation in coming years.
Australia has introduced new mandatory climate reporting rules that require business owners to estimate their company’s emissions and outline plans to tackle future risks.
The legislation, passed in 2024, is the most significant change to reporting requirements and director responsibilities in a generation, according to the Australian Institute of Company Directors (AICD).
It will require companies to disclose their greenhouse gas emissions and explain how a range of future climate scenarios could impact their business, in a sustainability report filed alongside their financial data.
Initially, the legislation will apply only to Australia’s largest companies but by 2027, thousands of corporate and not-for-profit organisations will be included — something AICD managing director and CEO Mark Rigotti said would be a significant change in the way companies approach their mandatory disclosures.
“It’s actually quite a fundamental step change in reporting and there probably hasn’t been as significant a change since 2003, when we moved from sort of domestic financial standards to international financial reporting standards,” Mr Rigotti said.
…
Read more: https://www.abc.net.au/news/2025-01-02/mandatory-climate-reporting-rules-begin/104718398
I’m not a legal expert so please consult your own lawyers, but it seems the only legally safe way to avoid being prosecuted for making misleading financial statements is to tell the truth.
Greens will be on the lookout, to pounce on companies which make misleading statements in their company reports about their climate policies. I fully expect to see some showcase prosecutions for companies which make misleading statements, directors who think they can play business as usual, misleading the public and their investors about their climate commitments.
The best way to play it safe is to admit you don’t have any plans to address climate change or reduce emissions.
Companies have a fiduciary duty to serve the interests of shareholders. A commitment to winding up the business if climate change erodes profit is a legally acceptable response to all these alleged climate threats. Companies are under no obligation to continue operating under adverse trading conditions. If the board believes shareholder capital is at risk, they are entirely justified enacting an orderly shutdown of the company and sale of corporate assets, to return as much capital as possible to shareholders.
So a company which says “If climate change adversely affects our business, we shall cease trading and sell all our assets” is entirely within their rights to do so, providing they can justify this statement as being in the best interest of shareholders. Going for short term profits, using their lack of climate action as a strategy to undermine competitors and win market share, then shutting down the company when this course of action is no longer tenable, is an entirely acceptable way to respond to the alleged climate crisis.
The reality of course is there is no climate crisis. But by taking an official position of accepting the existence of the crisis, then explaining you don’t intend to do anything about it, along with justifications for this position, company directors should be able to minimise their personal risk while serving the best interests of their shareholders.
If any director caves in to pressure to spend big on climate action, that course of action also carries risks. Merchant banks in the USA have been accused of conflicts of interest, because of their green commitments. Directors who cave to the green blob might find themselves personally liable for investor capital losses, if they divert too much shareholder cash away from profit making activities, if courts find they breached their fiduciary duty to shareholders.
I hope some company directors have the courage to take the high road, to stand up for shareholder interests instead of ducking and weaving, business as usual, trying to finesse their position while the green walls are closing in. Because if some of them do stand up and take the government on at their own game, 2025 is going to be an entertaining year for Australian climate policy.
Move off shore China or India more like it.
It is not the climate change but the political bs that will destroy Australia
And what exactly are these scenarios? I could happily state that in the case of scenario ‘8.5’ for example, my company would be wiped out, but that the chance of it occurring is so vanishingly small that I would be better off preparing for the Second Coming of the Great Prophet Zarquon.
Who was it who nailed the fundamental reason for setting up & operating a business –
” I’m not in this for self actualization, I’m in it for a f’n quid”
I always love those assertions “Our number one goal is Customer Satisfaction!”
No it’s not. It’s making a profit!
Goes along with “our most valuable asset is our people”. And what happens when profits diminish – people are laid off.
So how exactly does a bank or similar work out the Greenhouse Gas Emissions? Their electricity is likely a variable mix of fossil fuelled and renewables. And their provider won’t have that data. 10-3 solar – nil, 4-6 wind -nil, 7-7 fossil fuelled, but will vary daily, hourly.
The punishment is the task.
Everyone will get something wrong, you’ll quote one expert, I’ll quote another, I’ll use an estimate for black coal to electricity, you’ll use another value.
When the audit begins, the government can pick any number it likes, if you are not the flavour of the month, then your numbers will be wrong.
This is a game I would not play. If I were responsible for this, I’d sell my shares, get out of the directorship and leave it to some clown who may, one day, end up on Bubba’s lap.
I don’t believe that there is a correct answer that can be used in these company statements. And for that reason, the law should be thrown out. Where is the opposition on this?
It seems to me that the best course would be to simply state how much electricity your company uses, then declare that since the mix of energy sources for that electricity is in constant flux, it is impossible to accurately convert electricity usage to pounds of CO2.
Perhaps give a high and a low guestimate and declare that the actual number is somewhere in that range.
That might be correct for your electricity usage, now tell me how you’d do it for the inwards goods, the ones you incorporate into your products before sale.
If you leave that blank, then you have missed almost all of your CO2 contributions, (according to the Oz legal reporting requirements).
And people wonder why no one wants to open a new business in Oz or keep one going.
This law needs to go. What’s the point of reporting BS?
Story tip
Apparently the Royal Horticultural Society is now having trouble dealing with the British weather. Where now a decrease of frosts in winter is a sign of a ‘climate breakdown’ and that the fact that the UK has dry weather one summer and wet weather in a other. Has now become a ‘weather extreme’ and a ‘contradiction in weather’ that the RHS now have to navigate. We’ll at least according to The Guardian. 😂
All estimates have some level of uncertainty. The safest path is just to provide a range of estimates that is so wide as to be completely meaningless. “This year our CO2 emissions are estimated to be anywhere in the range of 0 – 100000000000 metric tons, depending on electrical generation mix, business conditions, and other unknown factors. Our plan is this: nothing.”
What the Australian government is doing is stupid and criminal. It could be a blessing in disguise. I think these companies should lay out all of the steps they have taken to operate in an environmentally proper fashion. They are doing everything reasonably doable. In addition they should clearly point out the benefits of any CO2 they may have emitted, along the lines that Vijay has pointed out in a previous post. They should list all the virtues of added CO2 and the benefits that fossil fuels bring to society. Such as cheap, clean and dependable transportation and power generation, fossil fuel derivatives such as plastics, synthetic cloth, fertilizers, cosmetics, lubricants, medicines and on and on. The benefits are unending and the corporation can’t understand why the government would want to take all these benefits especially the elimination of food poverty.
“Greenhouse Gas” Emissions Disclosure
To whom it may concern,
Our employees all emit “greenhouse” gases during the course of the day through breathing and flatulence. We are not concerned about the breathing, as everyone has to do it. We are concerned about flatulence, especially on Taco Tuesdays and when Liam, who has an affinity for Pakistani food, has goat curry, extra spicy.
We reckon our electricity usage emits greenhouse gases but we don’t know how much. We refer you to EnergyAustralia to provide you with the details. They’re much better at that sort of math.
We had a look at the RCP scenarios and trends. We reckon sea level won’t affect us as we’re miles from the shore. And none of the temperatures will affect us either, except RCP8.5, which frankly seems a bit hot. The aircon works fine so it should be up to the task when it’s 4 C warmer in 70 years, though we’re a bit skeptical of that number as we’re told that it’s only warmed a little over half a C in the last 45 years which puts it 1 C warmer in 70 years. Maybe you could check that number. Here’s our impact estimates for the RCP’s:
RCP1.9: nil
RCP2.6: nil
RCP4.5: nil
RCP6: nil
RCP8.5: a little, maybe, but as we mentioned, we’re not sure 4C is right, maybe 1C, which would be nil impact, but either way our aircon’s up to it, so no worries.
It’s always Liam!
Orwellian legislation. But Eric, I agree with your suggestion completely. What can the totalitarians actually do with an honest response especially if every company provides a similar response? This legislation is a hideous attempt to get all companies to inadvertently agree that anthropogenic CAGW is a universally accepted fact. Then their admission will be used against them.
Indeed – the one thing a tyranny fears is an honest man.
By a happy coincidence, the article by Vijay Jayaraj summarises the crop yield increases for a number of C3 plant crops under increased CO2 concentrations.
Very roughly, increasing the CO2 concentration by 50% from 372 ppm to 605ppm increases wheat yields by 25%. Other crops do at least as well.
On that basis, most crop growers could report that they are approximately carbon [dioxide] neutral, and expect a 0.5% production increase per 1% increase in atmospheric CO2 concentration.
It is not just business. The government idiots are making the public service do it too. A nice new employment scam for those unable to get work in the real world and at taxpayers’ expense!
Clearly GOOD!