The Business Council of Australia (BCA) has underscored the necessity of aligning climate-related financial disclosures closely with international standards.
This alignment, according to BCA, is pivotal for investors who are increasingly considering climate risks and opportunities in their investment decisions. The council supports the government’s draft climate-related financial disclosure exposure legislation, aiming to provide investors with a comprehensive understanding of climate-related risks and opportunities.
Bran Black, the Chief Executive of BCA, emphasised the importance of continuous improvement in disclosure quality to aid investment decision-making processes. He highlighted that for investors to make informed choices, access to robust and high-quality climate-related financial disclosure reports is indispensable. “Investors need to be able to make informed decisions, risks and opportunities pertaining to climate are increasingly important for investors and a high-quality robust climate-related financial disclosure reporting framework will be critical for future investments,” Mr Black noted.
Further stressing the need for clarity and precision in the obligations and legal exposures under the Corporations Act, Mr Black advocated for the Australian Accounting Standards Board (AASB) standards to closely mirror those of the International Sustainability Standards Board (ISSB). Such alignment is deemed essential for enabling valid comparisons across corporations in various jurisdictions while also minimizing compliance costs. Mr Black proposed a “training wheels” approach for the successful implementation of the new requirements, ensuring they benefit both the users and preparers of disclosures.
Moreover, Mr Black mentioned the importance of a well-timed commencement date for the legislation, suggesting a minimum of 12 months from the date the legislation is proclaimed or AASB standards are published, whichever comes later, before compliance is mandated. This approach, he believes, will ensure the reform’s effectiveness without rushing the process and risking potential failure.
The BCA’s stance on climate-related financial disclosures is a call to action for aligning domestic reporting standards with global benchmarks. This not only supports informed investment decisions but also promotes a sustainable future, acknowledging the integral role of financial markets in addressing climate change.
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