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The government of Australia has passed the Treasury Laws Amendment Bill 2024, which introduces mandatory climate reporting for large and medium-sized companies and sets a new climate risk disclosure framework in the country from 2025.
The new legislation is expected to mandate reporting for more than 6,000 Australian entities by 2030, and is expected to also apply to New Zealand subsidiaries.
Company stakeholders, impact investors, and asset managers need to comply with the new framework in order to operate sustainably in the country.
Let’s explore the Treasury Laws Amendment Bill in detail.
About the Treasury Laws Amendment Bill 2024
The Treasury Laws Amendment Bill includes rules, regulations, and amendments to the existing climate reporting regime for large Australian entities — both listed and unlisted companies — to improve transparency and accountability in corporate reporting. In short, the Australian entities need to disclose climate-related financial information in their annual report in the manner presented by the new Bill.
The main change in climate reporting requirements is that Australian companies will need to disclose climate resilience assessments based on two warming scenarios — a high scenario of 2.5°C and a low scenario of 1.5°C — in order to help companies evaluate and align their climate risk strategies.
Furthermore, the Australian Sustainability Reporting Standards (ASRS) is a big part of the new climate disclosure regime. It is expected to be finalized sooner in a month or two, and it will align closely and match with the International Financial Reporting Standards (IFRS).
Compliance with new reporting requirements in the Bill
The new reporting requirements will be phased in three groups. Group 1 entities having over 500 employees having revenues over $500 million, or assets over $1 billion need to comply from January 2025. Followed by medium-sized companies with over 250+ employees, $200 million+ revenue, and $500 million assets that need to comply two years later, while smaller-sized companies with 100+ employees, $50 million+ revenue, and $25 million+ assets need to comply with a year after that.
To comply with the new Regime, companies should assess if they meet the reporting thresholds, review existing climate risk management and reporting processes, prepare to integrate climate disclosures into annual financial reports, and consider seeking external assurance on disclosures.
Finally, compliance with the new reporting requirements will be overseen by the Australian Securities and Investments Commission (ASIC), and they will guide companies to transition to these requirements.
Next steps
For companies waiting to see what happens with this legislation it is time now to assess carefully how ready they are for mandatory climate reporting. In the coming weeks, the Australian Accounting Standards Board (AASB) is anticipated to finalize the Australian Sustainability Standard to set out all aspects of this Regime.
While you’re here…
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