Australia’s Push for Climate Accountability: New Mandatory Reporting Law

Australia is set to make a significant leap in climate accountability with its new draft legislation mandating climate-related reporting for a broad range of companies. This groundbreaking move aims to provide clear, reliable information on climate risks and opportunities, as well as greenhouse gas emissions, across various industries.

Proposed by Treasurer Jim Chalmers, the legislation is designed to harness economic opportunities arising from cleaner energy sources while managing climate change risks. It follows extensive consultations in 2022 and 2023, reflecting Australia’s commitment to a transparent net zero transformation. The new law is based on standards from the International Sustainability Standards Board, adapted to include specific requirements like Scope 3 emissions reporting.

Who’s Affected and When?

The legislation targets a wide range of entities, starting with large firms from July 2024. Public companies and large proprietary companies with over 500 employees or significant revenues and assets will be the first to comply. Medium and smaller-sized companies will follow suit in subsequent years. This phased approach also applies to Scope 3 reporting, offering businesses extra time to report on indirect value chain emissions.

To ensure the reliability of climate reports, the new law parallels assurance requirements with those of financial reporting. Companies will need to obtain assurance reports from financial auditors, underscoring the seriousness with which Australia is approaching climate-related disclosures.

With the draft legislation open for public consultation until February 9, the government invites input to fine-tune this shift in corporate climate reporting.