Corporate Management and Communication of Environmental and Social Risks in Australia: Pressures Are Mounting

This article contends that paradigm changes in corporate risk behavior in Australia are occurring and that the regulatory framework is shifting. An increasing number of listed corporations in Australia are providing risk disclosures and environmental and social information in their reports and on company websites, raising questions concerning the drivers prompting this reporting. The article suggests the reasons are multifaceted and reflect a confluence of emerging factors. There is growing scholarly and other evidence on the associations between sound management of business risks, effective communication of these risks, and superior long term commercial outcomes. This evidence has convinced a growing number of business leaders and investors that proactive management of environmental, social and financial risks is critical for companies to optimize their long term value, to operate sustainably, and to satisfy investor, other stakeholder and community expectations. In situations where companies fail to adequately manage and communicate their environmental and social risks, investors and other actors are collaborating and actively using their market influence and legal powers to promote cultural and behavioral changes. The scale and intensity of this market activism is, in turn, prompting corporate regulators to respond and intervene. Consequently, pressures are mounting on listed Australian companies to engage in more sophisticated analysis of environmental and social risks and to more effectively communicate these risk processes and outcomes.