Business Council of Australia Seeks One-Year Delay in Mandatory Climate Reporting

The Business Council of Australia (BCA) has called for a one-year postponement in the enforcement of proposed mandatory climate-related reporting laws for Australian companies. In a recent statement, the BCA argued for additional preparation time for businesses to comply with new legislation that mandates comprehensive reporting on climate-related risks, opportunities, and greenhouse gas emissions across the value chain.

The BCA’s request is part of its comprehensive submission to the Australia Treasury concerning draft legislation introduced earlier this year. This legislation targets large and medium-sized companies, setting forth requirements for climate-related disclosures that encompass both direct and indirect greenhouse gas emissions.

Bran Black, BCA Chief Executive, emphasized the importance of a phased approach to implementing these new disclosure rules, suggesting a “training wheels” strategy to allow companies adequate time to develop the necessary expertise and systems. The BCA believes this approach will facilitate a smoother transition to the new reporting standards, benefitting both the entities preparing the disclosures and their stakeholders.

The proposed legislation, as outlined by the Australia Treasury, would initially apply to public and large proprietary companies meeting certain thresholds, including having over 500 employees, revenues exceeding $500 million, or assets over $1 billion. These entities would start reporting for fiscal years beginning from July 1, 2024. Medium-sized and smaller companies are also set to come under these regulations in subsequent years, with staggered commencement dates based on their size and financial metrics.

While the BCA supports the advancement of climate-related financial disclosures, it advocates for adequate preparation time, appropriate liability safe harbors, and transition periods to ensure companies can effectively meet the new requirements. The council has also raised concerns about the need for clarity regarding the reporting standards to be applied, urging that the final standards allow for a minimum of 12 months from their publication or the legislation’s enactment before compliance becomes mandatory.

Furthermore, the BCA calls for the Australian Accounting Standards Board’s (AASB) forthcoming standards to closely align with the International Financial Reporting Standards (IFRS) International Sustainability Standards Board’s (ISSB) standards to facilitate cross-jurisdictional comparisons and minimize compliance costs. The BCA’s submission proposes extending the immunity from liability provided in the draft legislation to 2030 and expanding its scope to cover all forward-looking statements to ensure companies are adequately protected during the transition to these new reporting requirements.

In summary, the Business Council of Australia is advocating for a cautious and measured rollout of mandatory climate reporting laws, emphasizing the need for businesses to have sufficient time and legal protections to adapt to these significant changes.