The Australian government plans to implement mandatory climate-related financial disclosure requirements for businesses and financial institutions from 2024.
This is according to a consultation paper released by the Australian Treasury. This aims to increase transparency and accountability regarding companies’ climate-related plans, risks, and opportunities.
The rules will gradually apply to smaller entities over three years. Disclosures should include information on governance, strategy, risk management, targets and metrics, and greenhouse gas emissions. The intention to introduce these measures was previously outlined in a ‘Discovery consultation’ in December 2022. The new consultation paper seeks further feedback on the proposal’s specifics, including the coverage, content, framework, and enforcement rules.
The Treasury’s initiative echoes the International Sustainability Standards Board’s (ISSB) new sustainability and climate-related reporting standards. Specific disclosure requirements proposed include companies’ transition plans, climate-related risk management processes, and scenario analysis. Also, firms will have to report Scope 1, Scope 2, and material Scope 3 emissions, alongside industry-specific metrics.
Companies will be grouped by size for the phased implementation of these reporting requirements. Large entities with over 500 employees, revenues over $500m and assets over $1bn will come under these rules from 2024-2025. Medium-sized and smaller firms will follow in subsequent years.
Australian Treasurer Jim Chalmers said, “Our changes will give companies the confidence, clarity and certainty they need to invest, creating more jobs and opportunities for people in more parts of the country. The consultation paper released today is the next step in delivering the Government’s commitment to ensuring Australia’s large business and financial institutions provide more information and greater transparency on how they are responding to climate change and contributing to the net zero transformation.”
Earlier this year, the Australian government created a new net zero authority to ensure key stakeholders can ‘seize the opportunities’ of the country’s net-zero transformation.
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