While Australia’s largest firms acknowledge climate risks, many are yet to quantify exposure or integrate findings into strategic planning, highlighting a significant gap between recognition and actionable response amid new disclosure rules.
Australia’s biggest companies are beginning to acknowledge the financial threat posed by climate change, but most are still a long way from turning that recognition into hard numbers, capital plans or boardroom incentives.
Analysis by ERM, the sustainability consultancy, found that about two-thirds of the country’s largest listed businesses now say climate risk is material. Yet only around one in three has put a figure on the exposure. In the cases where companies have attempted to quantify the impact, the consultancy said the total annualised hit from climate-related financial risk already comes to between A$2.5 billion and A$4.5 billion.
Mary Stewart, ERM’s lead partner for corporate sustainability, told AAP that quantification is still not a formal requirement in the first year of reporting, but argued that firms identifying material risk should already be doing the maths. Her point goes to the heart of Australia’s new climate disclosure regime, which began rolling out for large entities from 1 January 2025 after the rules were delayed until this year.
The early disclosures suggest a gap between awareness and action. ERM said little capital has yet been directed towards the areas most exposed to climate shocks, and few companies have linked climate performance to executive pay or other internal decision-making mechanisms. Transition plans are also sparse, while many firms have deferred Scope 3 emissions reporting, even though those indirect emissions often account for the bulk of supply-chain impact.
That matters for industrial groups in particular. Physical risks such as floods, heat stress and disrupted logistics can affect factories, ports and mines directly, while transition risks can emerge through carbon pricing, tighter regulation, changing customer demand and higher financing costs. For heavy industry and resource businesses, the combination can quickly become material to earnings and cash flow.
ERM said energy and mining groups are currently the furthest ahead in assessing and managing those exposures, while financial services companies are lagging. The consultancy also warned that the gap between identifying a risk and funding a response remains “stark”, implying that many balance sheets are still not aligned with the risks they now disclose.
The broader backdrop is adding pressure. Reporting specialists and governance advisers have pointed to the strain that Middle East conflict is placing on fuel markets and shipping routes, with knock-on effects for emissions tracking and Scope 3 data. At the same time, advisers say boards are being pushed to strengthen accountability, improve climate-data controls and embed oversight more clearly across management structures.
Under the new Australian framework, the largest companies and financial institutions must disclose how climate-related risks and opportunities affect strategy, business models and financial performance, alongside information on governance, management and resourcing. Over time, smaller companies will be brought into scope as the regime phases in.
For industrial decarbonisation teams, the signal is clear: compliance is only the starting point. The next test is whether companies can translate disclosure into investment choices, resilience planning and transition strategies that stand up to scrutiny from investors, insurers and regulators alike.
- https://reneweconomy.com.au/australias-biggest-companies-yet-to-face-up-to-climate-risk-and-only-a-few-have-tried-to-count-the-cost/?utm_source=rss&utm_medium=rss&utm_campaign=australias-biggest-companies-yet-to-face-up-to-climate-risk-and-only-a-few-have-tried-to-count-the-cost – Please view link – unable to able to access data
- https://reneweconomy.com.au/australias-biggest-companies-yet-to-face-up-to-climate-risk-and-only-a-few-have-tried-to-count-the-cost/ – An article discussing how two-thirds of Australia’s largest companies acknowledge material climate risks, yet only a third have quantified their exposure. It highlights that the estimated $2.5-4.5 billion in annualised climate-related financial risk is likely just the beginning. The piece also notes that while energy and mining companies are leading in climate risk management, financial services firms are lagging. The article underscores the need for companies to integrate climate risk into business decision-making and to develop transition plans to address both physical and transition risks.
- https://www.hcamag.com/au/specialisation/corporate-wellness/middle-east-conflict-piles-pressure-on-australian-boards-over-climate-governance/571475 – This article examines how the Middle East conflict is pressuring Australian boards to enhance climate governance. It discusses how disruptions to fuel markets and shipping routes are increasing greenhouse gas emissions, particularly Scope 3 emissions, at a time when Australia’s mandatory climate reporting regime is being implemented. The piece advises organisations to strengthen governance, clarify accountabilities, and improve controls over climate data to address emerging risks.
- https://www.dlapiper.com/en-us/insights/publications/2024/12/key-elements-of-the-new-australian-mandatory-climate-related-reporting-requirements – This publication outlines the key elements of Australia’s new mandatory climate-related reporting requirements, effective from 1 January 2025. It details how large entities must disclose material information regarding the impact of climate risks and opportunities on their business model, strategy, and financial performance, as well as how these risks and opportunities are governed, managed, and resourced.
- https://www.spglobal.com/market-intelligence/en/news-insights/research/the-new-australian-climate-disclosure-regime-implications-and-considerations – This article discusses the implications and considerations of Australia’s new climate disclosure regime, which requires large businesses and financial institutions to report on a broader set of metrics and targets, including Scope 1, 2, and 3 greenhouse gas emissions, climate scenario analysis, and transition plans. It highlights the need for companies to prepare for these reporting requirements and the support available to assist them.
- https://www.argusmedia.com/en/news-and-insights/latest-market-news/2552481-australia-to-delay-mandatory-climate-reporting-to-2025 – This news piece reports on Australia’s decision to delay mandatory climate reporting to 2025. It details the revised proposal requiring the country’s largest companies and financial institutions to disclose their climate-related risks and opportunities, including Scope 1 and 2 greenhouse gas emissions, within their annual sustainability reports from 1 January 2025. The article also outlines the phased implementation for different company groups based on revenue and employee thresholds.
- https://www.insurancebusinessmag.com/au/news/breaking-news/australias-first-climate-reports-expose-gap-between-board-awareness-and-action-574398.aspx – This article highlights the gap between Australian companies’ recognition of climate-related risks and their actions to address them. It notes that while many companies acknowledge material climate risks, few have quantified their exposure, leaving gaps for insurers and investors. The piece discusses the need for companies to align capital allocation and governance with identified risks and to develop credible transition plans to remain profitable in a decarbonising world.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on May 7, 2026, making it current. However, similar analyses have been conducted in the past, such as a 2019 report highlighting Australian companies’ failure to plan for climate change risks. ([abc.net.au](https://www.abc.net.au/news/2019-02-18/australias-biggest-companies-ignore-climate-change-risk/10808966?utm_source=openai)) This suggests that while the issue persists, the specific data and analysis in this article are recent and original.
Quotes check
Score:
7
Notes:
The article includes direct quotes from Mary Stewart, ERM’s lead partner for corporate sustainability. A search for these quotes did not yield earlier instances, indicating they are original. However, without access to the full ERM report, it’s challenging to verify the exact wording and context of these quotes.
Source reliability
Score:
6
Notes:
The article is from RenewEconomy, a publication focusing on renewable energy and climate change. While it is a niche publication, it is known for its in-depth coverage of environmental issues. The reliance on ERM, a reputable sustainability consultancy, adds credibility. However, the article’s reliance on a single source for its analysis may limit the breadth of perspectives.
Plausibility check
Score:
8
Notes:
The claims about Australian companies acknowledging climate risks but failing to quantify them align with previous reports and analyses. The figures of A$2.5 billion to A$4.5 billion in annualised climate-related financial risk are plausible and consistent with industry expectations. However, the lack of specific company names or detailed examples makes it difficult to fully assess the accuracy of these claims.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article presents current and original analysis of Australian companies’ responses to climate risks, citing recent data and direct quotes from ERM’s Mary Stewart. However, the reliance on a single source and the absence of independent verification from other reputable outlets introduce some uncertainty. While the content is plausible and the publication is freely accessible, the lack of broader corroboration warrants a medium confidence level in the assessment.
