New Mandatory Climate Disclosure Law Passed by Australia Senate

Aug 29

Overview:

Australia has taken a significant step towards climate accountability with the Senate passing a new mandatory climate disclosure law. This legislation aims to enhance transparency and drive corporate responsibility in addressing climate change.

On August 22, 2024, the Australian Senate passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, marking a pivotal moment in the nation’s climate policy. This new law mandates climate-related financial disclosures for certain entities, aligning Australia with global standards.

Key Provisions

Mandatory Reporting: Starting from financial years beginning on or after January 1, 2025, companies meeting specific thresholds must disclose their climate-related financial risks and opportunities.
Scope of Reporting: Entities are required to report on Scope 1, 2, and 3 greenhouse gas emissions, scenario analysis, and transition plans.
Phased Implementation: The law introduces a phased approach, with initial reporting based on the size of the entity and its emissions levels.
Assurance Requirements: By 2030, all climate-related financial disclosures must undergo reasonable assurance.

Impact on Businesses

This legislation will significantly impact how businesses operate, pushing them to integrate climate considerations into their financial planning and reporting. Companies will need to:

Assess Risks and Opportunities: Identify and disclose material climate-related risks and opportunities.
Scenario Analysis: Conduct and publish scenario analyses to understand potential financial impacts under different climate scenarios.
Transparency and Accountability: Enhance transparency and accountability, fostering investor confidence and aligning with international sustainability standards.

Global Alignment

Australia’s new law aligns with international frameworks such as the International Sustainability Standards Board (ISSB) and the Task Force on Climate-related Financial Disclosures (TCFD). This alignment ensures that Australian companies remain competitive and attractive to global investors.

The passage of this mandatory climate disclosure law represents a significant advancement in Australia’s commitment to addressing climate change. By enforcing transparency and accountability, the legislation not only protects the environment but also strengthens the nation’s economic resilience.

Source: https://www.esgtoday.com/australia-senate-passes-new-mandatory-climate-disclosure-law/