Articles

Aligning Private Climate Risk Management to Paris Climate Goals: An Australian Perspective

Authors:

Abstract

Climate change is now clearly recognised as a source of financial risk for private sector actors. In Anglo-American jurisdictions like Australia, corporate law and prudential regulatory frameworks contain obligations to identify, disclose and manage material financial risks that can be applied to climate-related risks. These legal frameworks have served as a foundation for the emergence of a range of private regulatory initiatives which seek to develop and apply best practice standards for climate risk disclosure and management, and which involve a range of different actors in driving the uptake of, and seeking to enforce, these standards. This paper explores the body of emerging private climate risk regulation, focusing particularly on the central organising theme of these initiatives: aligning private climate risk management to the climate mitigation goals of the international Paris Agreement. It outlines the way in which Paris-alignment and net-zero emissions are emerging as new norms guiding private sector approaches to climate change and explores how this interacts with and builds on essentially climate-neutral, risk-based corporate law and prudential regulatory frameworks. While there is considerable potential in Australia for Paris-aligned private risk management to contribute meaningfully to achieving international climate mitigation goals, there are also well-founded concerns about the effectiveness of these private measures that require further investigation.

Keywords:

climate risk governanceparis agreementprivate climate regulation
  • Year: 2022
  • Volume: 18 Issue: 2
  • Page/Article: 107–126
  • DOI: 10.36633/ulr.802
  • Published on 28 Nov 2022
  • Peer Reviewed