The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill has been passed by the Senate to require mandatory climate reporting by large companies. Background.
UPDATE: the Bill was finally passed both Houses on 9 September 2024.
UPDATE: Act given Royal Assent on 17 September 2024.
The new laws establish Australia’s climate risk disclosure framework, introducing standardised climate-related financial disclosures.
The Australian Accounting Standards Board will issue internationally‑aligned standards. Large businesses will need to prepare an annual sustainability report to disclose their climate risks and opportunities in accordance with the new reporting standards.
Reporting requirements will commence from 1 January 2025 for Australia’s largest listed and unlisted companies and financial institutions and other large businesses will be phased in over time.
Initially it will apply to an entity which meets at least two of the following three criteria:
- the consolidated revenue of the entity (and the entities it controls) is equal to or greater than $500 million;
- the value of the consolidated gross assets at the end of the financial year of the entity (and the entities it controls) is equal to or greater than $1 billion;
- the entity (and the entities it controls) have at the end of the financial year, 500 or more employees.
Companies will need to make their climate financial disclosures in a ‘sustainability report’. The sustainability report will form part of an entity’s annual reporting package.
Companies need to obtain audit and assurance for their annual sustainability report.
Under the proposed climate disclosure regime, entities that are already exempt from lodging a financial report under Chapter 2M of the Corporations Act will not be obligated to prepare a sustainability report.
These exempt entities include:
- small and medium-sized businesses or asset owners that do not meet the thresholds;
- an entity has been provided with relief or is exempt from financial reporting by way of an ASIC class order or individual entity relief;
- charity and not-for-profit organisations.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
