Treasury unveils final policy design for climate reporting reforms

The Treasury has opened a consultation on the final policy design of corporate climate-related financial disclosure requirements.

This seeks to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities.

It is seeking feedback on the exposure draft, policy impact analysis and policy statement.

This is the third consultation following an initial one between December 2022-February 2023 and a second between June-July 2023.

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Listed and unlisted companies and registrable superannuation entities (RSEs) affected are broken down into three groups and must meet two of three criteria.

Group 1 are companies with either consolidated revenue of greater than $500 million, gross assets of $1 billion and 500 or more employees. Group 2 are those with consolidated revenue of $200 million, gross assets of $500 million and 250 employees or more then all other relevant entities.

Those in Group 1 must prepare an annual sustainability report for the 2024-25 and 2025-26 financial year while those in Group 2 must prepare one for 2026-27. All other relevant entities must prepare one for the financial years post-2027.

Super funds will be considered large if their funds under management are more than $5 billion.

For super funds, disclosure will support consistent reporting of climate-related risks and opportunities across the financial sector while companies will benefit from more transparency with their shareholders.

The start date for Group 1 will be 1 July 2024 but the Treasury is consulting on whether an extra year would allow more time to gather the required information.

Treasurer Jim Chalmers said: “Our changes will establish Australia’s climate risk disclosure framework, giving investors and companies the transparency, clarity and certainty they need to invest in new opportunities as part of the net zero transformation.

“This is an important step for improving transparency and will help investors and companies make more informed investment decisions and lay the foundation for a stronger, more robust financial system.

“The draft legislation gives companies the opportunity to build capacity to make high quality climate risk disclosures by providing early visibility of the proposed reporting requirements and expand the breadth of entities required to report over time.

“The Albanese Government is responding to the challenge of climate change and maximising the economic opportunities from cleaner, cheaper and more reliable energy.”

The submission will be open until 9 February.