Never has Australia so embodied Dorothea Mackellar's iconic lament, My Country, as it has in the past 12-months. It has been - and remains - a 'sunburnt country ... of droughts and flooding rains', a 'wide brown land' with 'pitiless blue sky', where we have seen 'cattle die ... for flood and fire and famine'.
Regardless of which side of the climate change fence one stands, it is clear that the economic, social and environmental costs of extreme weather events are crippling Australia.
As an agribusiness lawyer, and a grazier, I am acutely aware of these costs; and like many of my contemporaries, I am often looking for guidance as to how to mitigate business and personal exposure to climate change risks.
In January 2020, the World Economic Forum released its annual Global Risks Report, which lists the top 10 risks in terms of likelihood and impact that will affect the global economy.
Significantly, the top five risks in terms of likelihood are all environmental - extreme weather, climate action failures, natural disasters, biodiversity loss and human-made environmental disasters.
This is the first time in the survey's history that one category has occupied all five of the top spots.
In what is now a globally accepted definition, acute weather events are known as the 'physical risks' of climate change; the effects of which on agricultural production has been cause for global concern, in circumstances where our recent loss of agricultural production and loss of access to water, has placed Australia on the FAO's list of countries maintaining a level of food insecurity.
Despite the obvious financial implications extreme weather events have on agricultural companies; I have recently been drawn to consideration of how these events impact company director's duties.
In short, it is now clear that a failure by a director to inform themselves as to the material effect that extreme weather events will have on the company; and a failure to include such considerations in periodic financial or director's reports, may lead to criminal penalties, civil penalties or civil liabilities.
Whilst the corporate duty of a company to address and inform itself of climate change risks, or indeed report on such risks in its financial risk disclosure, is a relatively new issue; it is now clear through statements released by ASIC, the Australian Accounting Standards Board and the ASX Corporate Governance Council, that directors of publically listed must inform themselves sufficiently in order to make informed decisions, and take steps to mitigate the foreseeable climate change risks.
Given the financial impacts extreme weather events have on all agricultural companies, it is arguable that such reporting obligations may extend to privately owned companies for the purposes of maintaining transparency with lenders, insurers and private investors.
Whilst specific guidance or legislated reporting requirements have not yet been implemented in Australia; ASIC and ACSI have recommended that company directors use the Task Force on Climate-related Financial Disclosures Framework as a guide on the considerations relevant for reporting on climate change risks.
Given the extreme weather events endured by agricultural producers and companies in recent years, there appears to be no greater time for company directors to adhere to the recommendations made by ASIC and ACSI; particularly when it comes to ensuring the mitigation of personal liability.
- Caitlin McConnel is an agribusiness lawyer and a non-executive Future Farmers Network director.