Treasury has released a Consultation Paper on developing a Sustainable Finance Strategy which includes a compulsory climate disclosure regime for Australian businesses to support Australia’s pathway to net zero.
The strategy’s policy priorities are structured in 3 key pillars:
Pillar 1: Improve transparency on climate and sustainability
Pillar 2: Financial system capabilities
Pillar 3: Australian Government leadership and engagement.
Pillar 1 is designed to support informed investment decisions by providing financial market participants comprehensive and comparable information on financially material sustainability-related opportunities and risks.
The Government is already implementing mandatory climate-related financial disclosure requirements for large companies and financial institutions. These reforms are proposed to commence for reporting periods starting 1 July 2024 for the largest listed and unlisted companies, with others phased in over time. Background.
The Government is closely monitoring the development of other international sustainability-related financial disclosure frameworks and standards, with a view to establishing other globally aligned sustainability-related financial disclosure requirements (including nature) over time.
The Australian Accounting Standards Board (AASB) will develop Australian climate disclosure standards, in line with the ISSB’s IFRS S2 Climate-related Disclosures standard, with modifications as necessary for the Australian context.
The AASB has released an exposure draft Australian Sustainability Reporting standards commencing 1 July 2024 for consultation .
ED SR1 includes three draft Australian Sustainability Reporting Standards (ASRS Standards):
ASRS 1 General Requirements for Disclosure of Climate-related Financial Information
ASRS 2 Climate-related Financial Disclosures
ASRS 101 References in Australian Sustainability Reporting Standards.
Separately the Council of Financial Regulators’ Climate Change Working Group is producing a set of priorities to support participants in financial markets to manage financial risks and identify opportunities associated with climate change.
The CFR’s constituent agencies (the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA)) will focus on four key priorities: exploring the impact of climate change on the Australian economy; improving the transparency of sustainability-related information; contributing to the development of an Australian Sustainable Finance Taxonomy; and continuing Australia’s international engagement on sustainable finance.
It has produced a stocktake on climate-change activity here.
If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.
Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.