This is a service specifically targeted at the needs of busy non-executive Directors. We aim to give you a ‘heads up’ on the things that matter for NEDs in the week ahead – all in two minutes or less.
In this edition, we discuss the Federal Government’s consultation paper on a proposed climate-related financial disclosure framework, Women on Boards’ inaugural report on gender and cultural diversity on Australian boards, and ASIC’s expectations in relation to sustainability-related disclosures. We also examine the tabling of Australia’s first Annual Climate Change Statement in Parliament, and the Federal Court’s orders against Uber for contraventions of the Australian Consumer Law.
In Over the Horizon, we consider the effect of the domestic caps on gas and coal prices announced by the Federal Government in consultation with the State and Territory governments.
This will be the final Boardroom Brief for the year. The service will resume on 31 January 2023.
GOVERNANCE & REGULATION
Government consults on Australian climate-related financial disclosure framework. On 12 December 2022, the Federal Government released a consultation paper seeking feedback on the design and implementation of the Government’s commitment to a standardised, internationally-aligned climate-related financial disclosure framework. The framework proposes a ‘phased’ approach where the increased disclosure obligations would first apply to large, listed entities and financial institutions, and be later expanded to smaller firms. The proposed regime could commence as early as 2024, with the first reports being required for the 2024-2025 financial year. The Federal Government also considers that there is scope for the proposed regime to be aligned to the recommendations of the Task Force on Climate-Related Financial Disclosures initially, and reflect the International Accounting Standards Board standards when they become available for adoption in Australia. Treasurer Dr Jim Chalmers stated that the proposed reforms will ‘ensure Australia can grasp the economic opportunities from more investment in cleaner, cheaper and more reliable energy, and manage the financial risks that climate change presents’. Submissions on the consultation paper are due by 17 February 2023. See Treasury media release and consultation page.
Women on Boards publishes inaugural report on gender and cultural diversity on Australian boards. On 21 November 2022, Women on Boards released its inaugural report, Truth Be Told: Cultural Diversity on Australian Boards (Report). The Report recognises the significant progress that has been made towards increasing gender diversity on boards but also highlights the need for greater consideration of cultural diversity. The Report examined cultural and gender diversity measures within a sample of 232 boards across five sectors. It found that only 12.8% of board members were not from Anglo-Celtic backgrounds, culturally diverse women accounted for only 5.7% of all directors, and Indigenous Australians made up only 3% of the sample. The Report recommends that boards identify ethnicity in their board skills matrix to ensure gender and cultural diversity are considered as part of their recruitment process. Women on Boards Executive Director, Claire Braund, stated that ‘focussed attention from industry and organisations will drive the positive change we need in this area – just as it did gender balance on boards’. See Women on Boards media release.
ASIC Commissioner highlights expectations in relation to sustainability-related disclosures. On 7 December 2022, the Australian Securities and Investments Commission (ASIC) released an article by ASIC Commissioner Sean Hughes highlighting the regulator’s expectations on sustainability-related disclosures. Mr Hughes warned that ASIC will be ‘focused on the oversight of sustainability-related disclosure and governance practices of listed companies, managed funds, superannuation funds and green bonds’. ASIC is concerned by the lack of consistency, comparability and structure in disclosure practices by larger listed companies and continues to encourage adherence to the Task Force on Climate-related Financial Disclosures’ recommendations. Further, Mr Hughes encouraged directors to consider what governance structures might be required to be developed now to best support adherence to future disclosure and reporting practices, such as those proposed by the International Sustainability Standards Board. See ASIC media release.
First Annual Climate Change Statement delivered by Minister for Climate Change and Energy. On 1 December 2022, the Federal Minister for Climate Change and Energy, Chris Bowen, tabled the first Annual Climate Change Statement required under the new Climate Change Act 2022 (Cth) in Parliament. The Annual Climate Change Statement outlines Australia’s progress in achieving its emissions reduction targets, the economic, environmental and social risk that climate change poses, international developments relevant to addressing climate change, and the effectiveness of Australia’s policies in contributing to achieving its targets. Mr Bowen commented that the Annual Climate Change Statement ‘shows we are on the right track, but it is also a wake-up call for the nation to do more’. See Department of Climate Change, Energy, the Environment and Water media release.
Federal Court orders Uber to pay $21 million for contraventions of the Australian Consumer Law. On 7 December 2022, the Federal Court ordered Uber B.V. (Uber) to pay $21 million in penalties for engaging in conduct between approximately 8 December 2018 and 20 September 2021 that was misleading or deceptive, or likely to mislead or deceive, and making false or misleading representations with respect to price. The conduct consisted of Uber displaying estimated fare ranges for UberTaxi trips on its app and website when in fact the actual prices of the trips were likely to be less than the lower end of the fare ranges. Further, Uber admitted that cancellation messages displayed in this period were misleading because they stated that users may be charged a cancellation fee if they cancelled their trip, even during Uber’s ‘free cancellation period’. Australian Competition and Consumer Commission (ACCC) Chair, Gina Cass-Gottlieb, stated that this decision ‘clearly signals to businesses that misleading consumers about the cost of a product or service is a serious matter which can attract substantial penalties’. See ACCC media release and Australian Competition and Consumer Commission v Uber B.V.  FCA 1466.
OVER THE HORIZON
Industry debates whether price caps risk compromising Australian energy market. On 9 December 2022, Prime Minister Anthony Albanese announced that the Federal Government is collaborating with the State and Territory governments to deliver the Energy Price Relief Plan (EPRP). The EPRP will (among other things) place temporary caps on the domestic price of gas and coal in an effort to provide relief from electricity price increases. Significantly, it also introduces a mandatory code of conduct for the wholesale gas market that includes a ‘reasonable pricing’ provision. This provision will provide a basis for producers and buyers to negotiate domestic wholesale gas contracts at ‘reasonable prices’ based on the efficient long run marginal costs of domestic supply, and will apply for an indefinite period. Energy producers are opposing the measures, arguing that they will lead to long term cost overruns and supply issues as foreign investment is diverted to other jurisdictions, just as gas-fired electricity generation assets become essential to stabilise grids during the clean energy transition. Whether the EPRP will actually result in a reduction in household power bills (which is where the political rubber hits the round) remains to be seen.