The Australian government is looking into mandatory climate disclosures for corporates as it continues to step up its sustainability strategy.

The government’s Treasury announced on 12 December it had begun consulting on “standardised, internationally‑aligned requirements for disclosure of climate‑related financial risks and opportunities in Australia”.

It will be looking at where the disclosure requirements outlined by the International Sustainability Standards Board (ISSB) are suitable for Australian companies and where to offer flexibility. Currently in Australia, financial regulators have issued guidance that climate-related financial risks must be disclosed as part of existing obligations to disclose material risks, recommending the Taskforce for Climate-related Financial Disclosure (TCFD) as a framework for disclosure.

The paper gave few details on what the disclosure requirements will look like but said: “It is envisaged that legislation will likely set out (at a minimum) the details of covered entities, the location for any reporting requirements (e.g. in the annual report), and requirements to follow prescribed standards when making climate-related financial disclosures.”

However, it does propose some requirements to disclose Scope 3 emissions, in line with the ISSB framework.

Industry feedback

It also asks industry participants to supply information on how they are managing climate risks including what transition plans they have in place, and whether particular disclosure requirements and/or assurance of those requirements commence in different phases.

“The government has committed to ensuring large businesses provide Australians and investors with greater transparency and accountability when it comes to their climate-related plans, financial risks, and opportunities,” the paper said.

“As part of this commitment, the government will introduce standardised, internationally-aligned reporting requirements for businesses to make disclosures regarding governance, strategy, risk management, targets and metrics – including greenhouse gasses. To deliver on this commitment, legislative and other reforms will be required. Applying the standardised requirements will be mandatory for certain entities.”

The closing date for submissions to the consultation is 17 February 2023 and they can be sent to climatereportingconsultation@treasury.gov.au