More than 1000 company directors surveyed for a recent report said they were being pulled in different directions by stakeholders and often did not know whether to speed up or slow down.
They expressed what was missing was clarity, the findings from a climate governance study undertaken by the Australian Institute of Company Directors (AICD) showed.
The study, Climate Governance Study 2024: Moving from vision to action, was conducted in collaboration with advisory and investment firm Pollination, and surveyed 1057 Australian directors alongside qualitative studies with ASX 200 companies.
It revealed a high level of concern about climate-related risks and the need for a more coordinated approach if Australia is to meet its net-zero emissions targets.
A majority (80 percent) of directors expressed concern about climate-related risks. Of those who were concerned about climate change, 70 percent also saw opportunities to address it. And a third of boards (32 percent) have reconsidered their organisational strategy in response to climate risk and opportunity.
Most directors (72 percent) said they feel somewhat or well prepared for the introduction of the federal government’s climate reporting regime, but nearly half (43 percent) of not-for-profits said they were not prepared.
Sixty percent of directors said climate governance warranted more board attention.
AICD managing director and CEO Mark Rigotti said climate change was no longer just about compliance or reputation. It was now accepted as a key strategic issue, presenting both risks and opportunities for organisations.
“While directors acknowledge the need for substantial investment in climate transitions, they are often pulled in different directions by stakeholders. Particularly for listed companies, navigating different investor expectations and complex new regulation is a key challenge,” Mr Rigotti said.
“Directors are increasingly wary of what they commit to publicly, given the legal risks, uncertainty around emerging technologies and the fluid policy environment.”
The study identified government policy as both a driver and a drag on corporate climate transitions. Forty-two percent of directors said policy uncertainty was a barrier to climate governance, and policy was rated as the main barrier across all sectors.
Pollination managing director Zoe Whitton said: “Directors are responding fast to new policy and regulator scrutiny, but there’s a widely held view that these asks aren’t presently adding up. In aggregate directors aren’t sure whether to move faster or slower, and they’re not getting the clarity they need to decisively invest, collaborate and pursue new strategies.
“Alignment among directors, policymakers and investors will be essential to ensure that corporate Australia can realistically pursue net zero in a reasonable timeframe.”
Photo by Austin Kehmeier on Unsplash.
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