In December 2022, Treasury released a consultation paper seeking initial views for the design and implementation of the Government’s commitment to standardised, internationally-aligned requirements for disclosure of climate-related financial risks and opportunities in Australia.
Every organisation is likely to be impacted by climate change and the move to a decarbonised economy. This consultation is designed to bring to Australia, that which is already developing at a fast pace overseas, mandatory disclosures in respect of climate-related financial risks and opportunities.
Treasury has signalled that international sustainability standards, due for release in June 2023 by the International Sustainability Standards Board, could become mandatory for Australian large listed companies and financial institutions starting in the 2024/2025 financial year.
In our response to Treasury, we support the Government’s commitment to applying standardised climate-related financial disclosure requirements to large businesses in order to meet the growing demand for disclosure by investors.
Such disclosure requirements will increase the burden on preparers of financial statements and therefore we recommend initially these requirements are limited to large listed companies exceeding a certain income threshold.
Further, we recommended that the best place for such disclosures is part of the operating and financial review which is already required as part of the directors’ report by listed entities.
Whilst we appreciate that this area is moving at a rapid pace internationally, we recommend a minimum two year period for adoption of any new requirements from the time the international standards are issued to provide sufficient time to roll out education and awareness initiatives.
We also provided Treasury some considerations when developing an regulatory and assurance frameworks in relation to this topic.
You can read our submission below.
You can find out more about our advocacy work on the website here.