In this edition, we discuss the results of the second climate risk self-assessment survey conducted by the Australian Prudential Regulation Authority (APRA), a report on climate-related transition plan disclosures published by the International Organisation of Securities Commissions (IOSCO), the sentencing of a former director of Copper Strike Limited (ASX: CSE) (Copper Strike) for disclosure failures and Takeovers Panel proceedings in relation to Alara Resources Limited (ASX: AUQ) (AUQ) and Energy Resources of Australia Limited (ASX: ERA) (ERA).
In Risk Radar, we discuss the outcome of the 2024 Group of 20 (G20) Summit and the tension between calls for cooperative international trade and the growth of ‘de-globalisation’.
Regulation
APRA releases results of survey on climate change risk management in the financial sector
On 13 November 2024, APRA released the results of its second climate risk self-assessment survey, which offers insights into how regulated banks, insurers, and superannuation trustees identify, manage, and disclose financial risks related to climate change. The results show progress among larger entities, with improvements in governance, strategy, and risk management, but highlight gaps in disclosure practices and the use of metrics and targets. Smaller entities reported lower climate risk maturity, and approximately one-quarter of larger entities experienced declines in their maturity scores since 2022. APRA emphasised the importance of integrating climate risk into governance structures and will seek to elevate climate risk considerations within its regulatory framework, including by consulting on amendments to Prudential Standards in 2025 to mandate climate risk integration into risk management processes.
IOSCO publishes report on climate-related transition plan disclosures
On 13 November 2024, IOSCO published a report on climate-related transition plan disclosures, developed by its Sustainable Finance Taskforce. The report proposes coordinated actions for stakeholders, highlighting how these disclosures can support investor protection and market integrity while addressing challenges related to consistency, assurance, regulatory clarity, and capacity building. It also identifies five key components of effective transition plans: (1) ambition and targets; (2) decarbonisation levers; (3) governance; (4) financial resources; and (5) financial implications. It further encourages standard setters to provide markers for forward-looking information to help entities manage liability risks while enhancing climate-related transparency.
Legal
Former director sentenced for disclosure failures
On 20 November 2024, the Australian Securities and Investments Commission (ASIC) announced that former director of Copper Strike, Harry Hatch (Hatgikyriazis), was sentenced by the Melbourne Magistrates’ Court to six months imprisonment for failing to disclose his entire shareholding in Copper Strike. Mr Hatch used an associate’s brokering account to purchase additional Copper Strike shares without disclosing these purchases to the market, and pleaded guilty to authorising omissions of his relevant interest in Copper Strike shares in statutory documents on six separate occasions between 2016 and 2019. Her Honour Magistrate Hartnett noted that offences of this nature require deterrent sentences, and Mr Hatch was sentenced to six months imprisonment (to be released upon paying a $2,000 fine, subject to a 12-month good behaviour bond) and was disqualified from managing corporations for five years.
Takeovers Panel receives application in relation to the affairs of Alara Resources Limited
On 21 November 2024, the Panel announced that it had received an application in relation to the affairs of AUQ from Mr Kent Bedford in his personal capacity, and on behalf of certain members of AUQ. On 4 November 2024, AUQ announced its intention to undertake an underwritten renounceable 5 for 8 rights issue (the Offer). It intended that the Offer would be fully sub-underwritten by a substantial shareholder of AUQ, Al Tasnim Infrastructure LLC (ATI), which at the time of the application held 13.88% of AUQ. The applicant seeks orders to (1) replace the Offer with a rights issue at a 1-for-5 ratio unless AUQ demonstrates a genuine need to conduct the Offer at a higher ratio; (2) requiring that all shareholders, including ATI, be treated equally in the allocation of shortfall shares; (3) prevent ATI from increasing its shareholding in AUQ beyond 19.9% pursuant to the Offer (whether amended or not); and (4) requiring shareholder approval as a precondition to any rights issue sought by AUQ within two years of the final orders. The applicant seeks an interim order restraining the issue of new shares pursuant to the Offer or any other capital raising pending the outcome of the application. A sitting Panel has not been appointed at this stage and no decision has been made whether to conduct proceedings. The proceedings demonstrate that control party underwriting continues to provide fertile ground for Takeovers Panel disputes.
Takeovers Panel publishes reasons for declining to make a declaration of unacceptable circumstances in relation to the affairs of Energy Resources of Australia Limited
On 15 November 2024, the review Panel published its reasons for reviewing and affirming the decision of the initial Panel in Energy Resources of Australia Limited 04 [2024] ATP 22. As discussed in a previous edition of Boardroom Brief, the review Panel previously affirmed the decision concerning an application from Zentree Investments Limited and Packer & Co Ltd relating to the initial Panel’s decision concerning ERA’s proposed capital raise to fund ERA’s rehabilitation of a mine area up until 2027. The applicants submitted this would result in a substantial shareholder, Rio Tinto Limited, increasing its voting power above the compulsory acquisition threshold of 90% (the Offer). The review Panel reached similar conclusions to the initial Panel with respect to the conduct of the Independent Board Committee of ERA leading up to the Offer. In addition to those reasons, the review Panel found that the time and resources involved in a thorough review of underlying documents in relation to the IBC’s conduct, in line with the applicants’ submissions, would cause further delay to the Offer without any reasonable prospect that it may impact the Panel’s decision. The review Panel also noted that one of the applicants had breached the Panel’s Procedural Rules by disclosing information regarding the Panel’s decisions in relation to ERA’s affairs to the media. The review Panel did not decide to conduct proceedings in this instance due to the short time frame between this disclosure and the announcement of the same to the ASX dated 7 October 2024.
Risk Radar
Global trade – trending away from achieving sustainable development goals?
On 18 to 19 November 2024, world leaders at the nineteenth G20 Summit stressed the role of economic development in international efforts to achieve the Sustainable Development Goals adopted by all United Nations members in 2015, only 17% of which are currently on track to be achieved. The Summit, held this year in Brazil, is an annual meeting of the 19 member states, collectively accounting for approximately 85% of the world’s GDP, to discuss major economic challenges facing the world. The ‘G20 Rio de Janeiro Leaders’ Declaration’ highlights the importance of addressing debt vulnerabilities in low and middle-income nations in meeting these targets, calling for increased debt transparency for the benefit of stakeholders and private creditors. Considering the scale of wealth for which G20 member states are responsible, this collective emphasis on international trade and cooperation appears at odds with the growing trend towards ‘de-globalisation’ which may be accelerated by President-elect Trump’s political agenda (discussed in a previous edition of Boardroom Brief). Chair of the 2024 Summit and President Brazil, Luiz Inácio Lula da Silva, called for the developed G20 member states to ‘[advance] their climate neutrality targets from 2050 to 2045 or even 2040’, which could put fiscal pressure on economies like Australia which rely on international trade of non-green resources. The 2025 UN Climate Change Conference in Belém, Brazil will be a chance for many of the G20 members to evaluate their progress in achieving the goals set out in the Declaration.