9 September 2024: Both Houses of Parliament have now approved the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, with the amended Bill passing the House of Representatives. The Bill introduces mandatory climate-related financial reporting by amending the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth).
The Bill will now receive Royal Assent and be enacted into law. The legislation will require many Australian companies, both listed and unlisted, to disclose their climate risks and opportunities through annual sustainability reports, marking a significant shift in corporate reporting practices.
What about the Australian Sustainability Reporting Standards (ASRS)?
The Australian Accounting Standards Board (AASB) is expected to finalise the development of the new Australian Sustainability Reporting Standards (ASRS) shortly. Under the new legislation, the new climate disclosure requirements are consistent with the global International Sustainability Standards Board (ISSB) standards, providing stakeholders—including investors, customers and regulators—with clearer insights into climate-related risks and opportunities.
What were the new amendments proposed by The Senate?
The Bill closely aligns with the version introduced in March 2024, with one notable change: Entities must now disclose specific scenario-based climate risk information using at least two scenarios:
- 1.5°C: Reflecting a low global warming scenario aligned with the Climate Change Act 2022.
- 2.5°C or higher: Representing a high global warming scenario, exceeding the limits mentioned in the Climate Change Act 2022.
These scenario-based disclosures will help companies assess their resilience under varying climate conditions.
When will the new legislation apply?
The mandatory climate reporting regime has a phased implementation, starting from 1 January 2025 for entities meeting the Group 1 threshold.
For a detailed overview of the mandatory climate reporting regime, the ASRS and other requirements, read our article: “Are you ready for mandatory climate risk reporting?”
By meeting these upcoming regulations, companies can not only fulfill their legal obligations but also improve their sustainability initiatives and disclosure transparency, avoid greenwashing and build greater trust among stakeholders.
