The government has launched a second consultation to seek views on its proposed position for the implementation of a standardised, internationally-aligned climate-related financial disclosure.
This follows its discovery consultation from December 2022 to February 2023, which received almost 200 submissions from peak bodies, businesses, individuals, academics, research institutes, and public sector entities.
“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,” said Treasurer Jim Chalmers in a statement.
“The proposals reflect feedback from industry, investors, financial regulators and the broader community, and public consultation is being undertaken for the next stage of this important work.
“Australian businesses and investors will benefit from clear expectations of how climate‑related risks and opportunities should be reported, strengthening the overall stability of the Australian financial system.”
The consultation outlines the proposed implementation approach, including:
- Mandatory reporting requirements commencing from 1 July 2024 for Australia’s largest listed and unlisted companies and financial institutions, with other businesses subject to the requirements over time;
- A three‑year transitional period, with regulator only action against directors and reporting entities in relation to forward looking statements and scope 3 emissions possible during this time; and
- Broad alignment with international climate disclosure standards.
The proposed climate reporting regime will form part of Australia’s broader sustainable finance framework, including a sustainable finance taxonomy and initiatives to tackle greenwashing and strengthen transparency of sustainability‑related financial products and markets, Chalmers added.
The government’s proposed sustainability and climate-related financial disclosure reporting standards draws on the global baseline developed by the International Sustainability Standards Board (ISSB), which has now released its exposure draft and is aiming for final approval in late 2024.
Australia’s detailed disclosure standards will be formally established by the Australian Accounting Standards Board (AASB), with the intention to align them as far as practicable with the final standards developed by the ISSB.
Among its proposals, the proposed disclosure requirements will be phased-in over three years, with full application of the mandatory reporting for all groups of reporting entities from the 2027–-28 reporting year onwards.
“Sustainable finance is a critical part of our climate agenda and with this action, financial markets will be much better placed to make the long‑term investments needed to meet our targets,” Chalmers said.
In the 2023‑24 Budget, some $4 billion had been committed to power Australia’s transformation into a renewable energy superpower. This was in addition to $1.6 million to co-fund with the private sector the development of an Australian sustainable finance taxonomy; $8.3 million over four years to develop and issue sovereign green bonds; and $4.3 million to bolster ASIC’s enforcement action against greenwashing and funding for social impact investment, including a $100 million Outcomes Fund.
Submissions for the second consultation will close on Friday, 21 July 2023.
