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Climate Crackdown forAustralian Corporates CORPORATE Austmlia faces a crackdown on disclosing climate risks after major investor groups held briengs with Treasuryand the nation's nancial watchdogs to introduce a mandatory reporting system by 2024. The InvestorGroup on Climate Change (IGCCl who represents institutional investors in Australia and New Zealand with $2 trillion in assets wants to make permanent a scheme aimed at giving shareholders more information about the risks presented by climate change. known as the Taskforce for Climate Related Financial Disclosure lTCFD). The regime would initially be created undera voluntary 'if not, why not' approach before moving to a strict mandatory system by 2024 to protect national economic stabilityand help investors properly price assets as nancial markets grapple with how to address climate risk. Talks have been held between the IGCC and its investment partners with Commonwealth Treasury, theAustralian Prudential Regulatory Authority, Australian Securities and Investments Commission and the ASX Corporate Governance Council. The plan would initially target Australia's top 300 listed companies and large unlisted businesses in the hope the powerful Council of Financial Regulators would provide oversight of the investor scheme. While 60 companies in the ASXZOO have adopted the fmmework known as TCFD. there is concern from investors over a range of different approaches to disclosing risks which could lead to funding being withheld by nanciers pushing fora stronger response to the issue. There is currently a voluntary approach inAustmlia. although listed companies must comply with the continuous disclosure regime. \"Institutional investors have reported that the quality and consistency of these company disclosures is severely lacking, leading to the underapricing of climate risks in the market." the IGCC said. "At the same time companies and nancial organisations have been left to navigate the complex and technical elements of such reporting. creating signicant business burden.\" New Zealand became the rst country to introduce a law which requires the nancial sector to disclose the impact of climate change on businesses and how they will manage climatearelated risks and opportunities. Australia's bank regulator warned in April of the unprecedented, farrreaching impact of climate change on all park of the nancial system, putting lenders and insurers on notice they need to be on top of the risks to their businesses. Extract from Williams, P. Climate Crackdown forAuslralian Corporates. Herald Sun a June 29V 2021. Required Question 3.1 The article states that the climate risk reporting framework will initially be created under a voluntary 'ifnbt, why not' Explain what a voluntary 'if not, why not' approach is and the advantages of such an approach before imposing a mandatory system. Question 3.2 What theories can be applied to the situation reported in this article