Climate Change Disclosure Reporting
20 February 2024
The federal government has initiated a public consultation on the conclusive policy design for corporate climate-related financial disclosure requirements. The proposed framework, outlined in draft legislation amending the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001, introduces standardised reporting mandates for businesses.
Among these amendments, as detailed in the exposure draft’s explanatory materials, is a new “sustainability report” that entities will need to prepare in addition to their financial statements.
The report will consist of the climate statement for the year, notes to the climate statement, any statements prescribed by the regulations for the year, and the directors’ declaration about the compliance of the statements with the relevant sustainability standards.
The government has suggested that a “phased-in approach” should be used for the obligation to prepare a sustainability report, starting with a relatively limited group of very large entities.
Scope: The introduction of a new “sustainability report” detailing climate statements, related notes, prescribed statements, and directors’ declarations.
Framework: Standardised, internationally aligned reporting requirements for businesses to ensure high-quality climate-related financial disclosures.
Thresholds: Phased implementation for entities reporting are as follows:
Group 1 entities (companies with a consolidated revenue equal to or greater than $500 million, gross assets of $1 billion, or 500 or more employees) are obligated to prepare sustainability reports for FY2023–24 and FY25–26.
Group 2 entities (consolidated revenue of $200 million, gross assets of $500 million, and 250 employees) are expected to report for FY26–27.
Other entities are not obligated until after the financial year 2027.
The proposed phased approach allows companies to build capacity for high-quality climate risk disclosures with early visibility of reporting requirements.
The public consultation period is open until February 9, 2024. the AFGC will be making a submission and welcome members’ feedback. Please get in touch with Sarah Collier – Associate Director – Sustainability, at sarah.collier@afgc.org.au
