Material business risk in a carbon-constrained economy
Avoiding ‘boilerplate’ reporting against Principle 7
The Federal Government’s major policy response to climate change – the Carbon Pollution Reduction Scheme – promises to exert fundamental, inexorable and almost certainly disruptive force on the manner in which Australian corporates operate. In line with the global financial fallout from the US subprime mortgage crisis, it is a market development that presents significant potential risk to the strategy and operations of many Australian corporations, with flow through effects to scenario planning and risk management, and therefore governance and compliance.
Management of this significant new material business risk will need to be reported under Principle 7 (Recognise and manage risk) of the ASX Corporate Governance Council’s revised Corporate Governance Principles and Recommendations. Yet is would appear this issue is not even on the agenda of many boards and, one can speculate therefore, is being less than fully and effectively risk managed by executive management.
In this article for the February 2009 edition of Keeping Good Companies - Chartered Secretaries of Australia’s monthly journal - Deloitte Risk Services Partner, Craig Mitchell, focuses on the issues of which company secretaries and others need to be aware in order to assist their corporations report against revised Principle 7. These include:
- The expanded scope of revised Principle 7
- The quality of disclosure
- The gap between disclosure and reality
- The degree of detail and rigour needed to be achieved
Readers will be able, by reference to the ‘hypothetical’ corporation included, to measure their corporation's progress along the risk management continuum.
To read the article in full, please download the attachment below.
ASX Corporate Governance Series
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