
Climate governance study 2024: Moving from vision to action
This study reveals that Australian directors increasingly prioritise climate change as a material governance issue. However, stakeholders are pulling in a variety of directions, making it challenging for organisations to execute their climate strategies. Policy uncertainty poses the most significant obstacle for climate governance, although the implementation of mandatory climate reporting from July 2025 presents an opportunity for greater accountability.
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OVERVIEW
The study finds that Australian directors are becoming increasingly focused on the issue of climate change as it poses a material governance issue. However, organisations face several challenges in executing their strategies. Stakeholders are pulling in various directions, and policy uncertainty presents the most significant obstacle to climate governance.
The study recommends that companies elevate their governance focus by conducting assessments of the board’s climate and transition skills periodically. They should collaborate and share understanding and capability across value chains and industries within legal constraints. Furthermore, companies need to use mandatory climate reporting as a platform, actively build and extend understanding of the climate policy landscape for the organisation, act to understand reporting obligations, and constructively challenge management implementation plans.
Chapter 1: Australian directors continue to prioritize climate governance
Australian directors are focusing on the climate change issue, with the vast majority considering it a material governance issue. About 74% of directors see climate as a material governance issue, up from already-high levels in 2021 when the AICD first assessed director perspectives.
Chapter 2: Moving from climate ambition to execution is a growing challenge
The report highlights that many organisations face significant challenges in executing their climate change strategies. Accessing high-quality data, managing complexity, and aligning short-term economic needs with long-term transition goals remain the key challenges.
Chapter 3: Stakeholders are pulling in different directions
Stakeholder engagement has become more important as investors increasingly demand that companies focus on ESG factors. However, Australian directors find it challenging to balance the demands of various stakeholders and deliver integrated solutions.
Chapter 4: Policy and regulation act as both a driver and drag on transition plans
Policy uncertainty and regulation obstacles prevent many organisations from moving from climate ambition to execution. The AICD has recommended that businesses use mandatory climate reporting as a catalyst to re-assess their organisational climate strategy and assess the necessary level of ambition.
Chapter 5: Board approaches to climate change continue to evolve
Boards’ approaches to climate change have evolved over time, with most organisations having established a board committee that considers and advises the board on climate change issues. However, there is still a lot of variation in board governance approaches, and most organisations do not presently have a board committee that considers climate change.
The report concludes that managing climate change is critical for companies in Australia. To achieve success, organisations need to ensure that they collaborate and share knowledge, establish robust governance structures, and focus on developing the requisite skills among directors. The implementation of mandatory climate reporting presents an opportunity for businesses to drive change, re-assess their organisational climate strategy, and level of ambition while simultaneously positioning themselves as leaders in climate governance.