Is your business ready for mandatory climate reporting?

Australia has a new sustainability reporting framework. The new climate-related financial disclosures legislation, Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Act), was passed in September 2024.

Described by ASIC Chair, Joe Longo, as the biggest change to corporate reporting in a generation, the Act mandates that relevant entities disclose their climate-related plans, financial risks and opportunities, in accordance with Australian Sustainability Reporting Standards (ASRS) made by the Australian Accounting Standards Board (AASB).

The new, comprehensive framework positions Australia as one of the first countries globally to implement International Sustainability Standards Board (ISSB)-aligned requirements on reporting entities in line with international best practice standards, and provides investors and companies the clarity they require to support Australia’s net zero transformation.

Here’s what your business needs to know

• In a three-year phased approach from 1 January 2025, Australian businesses must prepare an annual ‘sustainability report’ which consists of:
  • a climate statement for the year
  • notes to the climate statement
  • any statements required by a legislative instrument relating to matters concerning environmental sustainability
  • a directors’ declaration.
• The ‘sustainability report’ must be provided to shareholders and lodged with ASIC.
• Reporting will be phased:
  • Group 1 entities (large companies and heavy emitters) will report from 1 January 2025
  • Group 2 entities (large asset managers with greater than $5 billion under management) will report from 1 July 2026
  • Group 3 entities (where the entity assesses that they face material climate-related risks or opportunities) wil report from 1 July 2027.
• The final version of the legislation is largely unchanged from the version that was originally introduced in March 2024, but there are some limited changes to be aware of.
• The key change was to scenario analysis disclosures, which need to consider two scenarios — a scenario where global average temperature increase is limited to no more than 1.5 degrees, and a scenario where the global average temperature increase exceeds 2 degrees.
• The legislation excludes charities, but will cover those Not-for-Profits that meet size thresholds.
• The legislation also includes a phased-in approach for Scope 3 reporting, allowing companies an extra year from the beginning of their disclosure requirements to report on the quantity of their indirect value chain emissions, in addition to three years of protection from litigation concerning Scope 3 disclosures.
• ASIC has established a dedicated sustainability reporting page on its website to provide information about the new regime and how it will be administered.

What this means for you

• It is important to familiarise yourself with the Australian sustainability reporting climate framework and understand how the requirements and deadlines apply to your organisation. ASIC’s new regulatory guide for the climate reporting regime is expected later this year.
• Businesses that have not been voluntarily reporting under the Taskforce for Climate-related Financial Disclosures (TCFD) will need to establish a decarbonisation pathway — undertaking climate risk assessments and scenario analysis, and integrating climate targets and metrics into the strategy and governance of their organisation.
• It is expected that disclosures during the first years of the new regime will be heavily scrutinised for greenwashing by ASIC, shareholders and stakeholder groups. It is therefore critical to ensure directors’ declarations are robustly verified and disclosures (together with related public statements) are appropriately audited.

How we can support you

Our experienced reporting team works with clients of varying climate and sustainability reporting maturity to seamlessly manage the whole reporting process.

Whatever level of support you need — from planning and writing, to design, print and digital production — we partner with you to produce impactful and engaging reports that expertly showcase your business, achievements and sustainability performance.

Beyond the report, we can assist with stakeholder engagement as part of your materiality process, the development of employee engagement strategies to embed sustainability principles and practices within your business, and the preparation of collateral to showcase your sustainability achievements.

To find out more, view our website Annual and Sustainability Reports – Rowland or contact our Director of Creative Services, Suzanne Collins directly on suzanne.collins@rowland.com.au.

We’d love to work with you.