There is a current proposal for climate reporting obligations, based on global standards, to be imposed on large Australian corporations and financial institutions from July 2024.
A guide, entitled ‘A director’s guide to mandatory climate reporting’ has been released to assist Directors to prepare for the reforms (Climate Guide).
The Climate Guide:
- outlines the proposed Australian mandatory reporting framework;
- sets out the key legal obligations for directors; and
- provides practical steps that directors can take to ready their organisations for the commencement of the mandatory climate reporting regime.
Having regard to the International Financial Reporting Standards, Directors will need to ensure that their companies make disclosures of material climate-related risks.
These disclosures apply across a broad array of company matters, and will require disclosure of (but not limited to) the following:
- The processes in place to identify and prioritise climate-related risks and opportunities.
- Any transition plans, including how the company plans to achieve any climate related targets that have been set.
- Quantitative information on the current and anticipated effect of climate-related risks and opportunities on the financial aspects of the organisation.
- How climate risk management is integrated into the company’s overall risk management process.
The mandatory climate reporting requirements will be rolled out across Australian organisations using a three (3) tiered approach (as set out below), depending on the size and financial standing of the organisation.
From 1 July 2024, climate reporting requirements will apply to disclosing entities, public companies, registered schemes and large private companies (Reporting Entities) which fulfil two (2) of the following thresholds:
- Having over 500 employees.
- Owning over $1 billion in consolidated gross assets.
- Earning over $500 million in consolidated annual revenue.
From 1 July 2026, climate reporting requirements will also apply to Reporting Entities which fulfill two (2) of the following three thresholds:
- Having over 250 employees.
- Owning over $500 million in consolidated gross assets.
- Earning over $200 million in consolidated annual revenue.
From 1 July 2027, climate reporting requirements will also apply to Reporting Entities which fulfill two (2) of the following three thresholds:
- Having over 100 employees.
- Owning over $25 million in consolidated gross assets.
- Earning over $50 million in consolidated annual revenue.
Reporting Entities will be given leniency to the extent of their disclosures over a four-year “phase-in” period. This will allow Reporting Entities to develop their climate reporting policies and to ensure compliance with the reporting standards.
If you would like advice or assistance in relation to mandatory climate reporting requirements and how this affects your business, please contact our accredited business law specialists and Partners Justin Thornton on email@example.com and Rahul Lachman on firstname.lastname@example.org or otherwise by calling them on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.