Directors’ Duty of Care and Climate-Related Financial Disclosure: Navigating Australia’s Recent Reforms in Quest of Solving an Insoluble Conundrum

Abstract Science and technology are key driving forces behind change in modern society, influencing our expectations, politics, economy, and culture. A recent study by the World Health Organisation finds that nearly a quarter of global deaths – especially among children under five – stem from preventable environmental causes. On April 10, 2024, the Executive Secretary of the UNFCCC warns that the world has only 2 years to act decisively to prevent more severe climate consequences. Greenhouse gases trap heat in the Earth’s atmosphere, propelling global warming and climate change, which carry not only humanitarian but also serious financial consequences. The G20 nations and the Financial Stability Board, which monitors and makes recommendations about the global financial system, have highlighted climate change as a major threat to global financial stability. In response to the impending climate catastrophe, Australia enacted the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, requiring corporations to make mandatory climate-related financial disclosures. These reforms – which include, inter alia, a new legal duty imposed on company directors – are scheduled to be implemented in phases beginning in January 2025. This article analyzes how the directors’ duty of care and diligence aligns with their responsibilities to disclose climate-related information. Drawing on a doctrinal analysis methodology informed by archival sources, it also critically examines how the directors’ duty of care and diligence could be applied under Australia’s corporations law before and after the 2024 legislation, and how this statutory overhaul may influence legal reforms in other jurisdictions. The study concludes with its key findings and the broader policy implications. The legislative reforms may guide the shaping of climate-related disclosure law within the Asia–Pacific region.