Treasury sought views on the Exposure Draft legislation for climate-related financial disclosure.
This consultation followed the government’s announcement of the final policy design for corporate climate-related financial disclosure requirements.
The Exposure Draft legislation seeks to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 (Cth) to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities.
Overall, Climateworks supports the framework introduced in the exposure draft legislation.
However, we recommend the legislation be strengthened to ensure Australia uses mandatory climate risk disclosure to the best effect.
Climateworks supports the Australian Government expectation set out in the Policy Statement that corporate scenario analysis must include a 1.5 degree-aligned scenario.
Climateworks recommends:
- Entities with a non-material risk should be required to present why they should be exempted from reporting.
- Government explicitly defines what is included in the proposed legislation review to ensure that mandatory disclosure is fit-for-purpose, and brings forward the review to 2027–28.
- Government or its agencies monitor the impact of the proposed flexibility mechanisms on emissions and investment.
- In line with Government expectations, auditing and assurance should be mandatory for scope 1 and 2 emissions a year after emissions reporting becomes mandatory for the relevant group. Climateworks recommends that Scope 3 emissions reporting should also be subject to auditing and assurance a year after mandatory reporting commences for the relevant group.
- Treasury maintains oversight of scope 3 emissions until reporting is required and ensures assurance on scope 3 emissions is not delayed until July 2030.
- During the limited liability period, the Australian Securities and Investments Commission (ASIC) should be tasked to work with entities to ensure they are building capabilities in scope 3 disclosure, scenario analysis and sustainability reporting, and help identify issues that require further guidance.
- The climate-related financial disclosure legislation should include a signal that there will be a future requirement for credible transition plans.
- Government provides greater clarity on how it will be self-reporting in line with mandatory disclosure.