Key Insights from the Climate Governance Forum 2025: Navigating the Climate Imperative
The Climate Governance Forum 2025, hosted by the Australian Institute of Company Directors (AICD), brought together experts and leaders to delve into the rapidly evolving landscape of climate governance, emphasising the critical role of directors in addressing climate-related financial risks and opportunities. A central theme highlighted throughout the forum was the accelerating pace of climate risks and their massive financial impact. Extreme weather events have doubled since 2015, with Australia experiencing a staggering 67% increase in insured costs over the last five years, totalling $22.5 billion. This underscores a fundamental shift in climate reporting, moving from a focus on morality to one of materiality — understanding the direct financial impact of climate change on businesses.
A significant focus was placed on mandatory climate reporting, with Australia positioned as a global leader in implementing the new International Sustainability Standards Board (ISSB) standards. Directors are now urged to treat climate disclosures with the same legal rigour as a prospectus, taking extensive legal advice due to evolving standards and potential class action risks. This responsibility extends to the CFO level, requiring a multidisciplinary approach that integrates financial, risk, and sustainability expertise. Boards must foster continuous learning to understand climate risks and opportunities specific to their businesses, as they will be signing declarations with the same liability as financial statements. Companies are encouraged to start early with “minimum viable product” (MVP) dry runs to ensure high-quality, comparable disclosures.
Climate Governance 2025 Key Insights
The forum showcased numerous examples of innovation driving practical climate solutions. Companies like Stockland and IAG demonstrated initiatives such as engineered timber, low-carbon concrete, renewable energy agreements, and fleet electrification. Stockland’s partnership with Energy Bay for roof-space rental for solar power was highlighted as an example of creative thinking overcoming traditional barriers. Speakers stressed that successful climate solutions require persistence and economic viability.
Despite global “climate hokey pokey” where major nations oscillate on climate policies, Australia is characterised as having an ‘orderly transition’ with policy stability enabling long-term business decisions. However, challenges remain, particularly with Scope 3 emissions reporting, which is difficult due to dependencies outside company control. The forum reinforced that effective climate governance must be embedded into core business functions, including capital allocation and M&A considerations, rather than being treated as a separate issue.
Beyond carbon, the importance of nature governance was highlighted, with nature being reframed as critical infrastructure essential for the economy. Assigning monetary values to nature impacts is crucial for business engagement. The sport sector also emerged as a powerful platform, serving as a climate innovation laboratory and leveraging athletes’ unprecedented influence to drive action.
Climate Governance New Business Reality
Ultimately, the forum emphasised that transition plans must be robust business cases, thoroughly costed and not just aspirational documents. Banks are actively engaging clients on these plans as key lending criteria. While boards face competing priorities, climate impact is inevitable for every organisation, necessitating a shift from a compliance mindset to one of competitive advantage and market leadership. Boards must ensure adequate resourcing for climate reporting and governance, as ASIC has signalled limited sympathy for companies failing due to insufficient resources. The clear message was to embrace opportunities, drive innovation, and proactively navigate the net zero transition for long-term resilience and success.