The Australian Senate has approved a bill mandating climate reporting for large and medium-sized enterprises.
According to ESG Today, this legislation marks a pivotal advancement in Australia’s commitment to transparency in climate-related activities, aiming to align with the International Financial Reporting Standards (IFRS) Foundation’s new guidelines issued by the ISSB.
The freshly endorsed law mandates comprehensive disclosures concerning climate-related risks and opportunities, alongside detailed reports on greenhouse gas emissions throughout companies’ value chains. This move is set to catalyse Australia’s journey towards a net zero economy by enhancing the clarity and certainty for both investors and businesses. According to Australia Treasurer Jim Chalmers, “These critical reforms provide investors and companies the clarity and certainty they need to support the net zero transformation and further strengthen Australia’s reputation as an attractive destination for international capital.”
Initiated earlier this year, the legislation is part of a broader sustainable finance strategy under the Albanese government. The government’s Sustainable Finance Roadmap, revealed in June, outlines several priorities, including the creation of a sustainable finance taxonomy and a labeling scheme for sustainable investments, designed to boost private capital mobilisation for sustainable initiatives.
The legislation initially targets all public and large proprietary companies that are required to submit audited annual financial statements to the Australian Securities and Investments Commission (ASIC), focusing first on those with significant operational scales—over 500 employees, revenues exceeding $500m, or assets above $1bn. The reporting criteria will extend to medium-sized companies in subsequent phases, ensuring a comprehensive inclusion across various business scales.
The Australian Accounting Standards Board (AASB) and the Australian Auditing and Assurance Board (AUASB) are in the midst of developing aligned standards for these climate disclosures, with expected issuance and assurance standards rollout by late 2024, setting the stage for reporting beginning in 2025.
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