Treasury releases draft legislation on climate reporting

This significant milestone confirms the pathway to mandatory reporting of climate-related financial disclosures subject to the passage of legislation through Parliament. It follows the release by the Australian Accounting Standards Board (AASB) of the Exposure Draft ED SR1 Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information in October 2023.

The Exposure draft legislation is the outcome of previous discovery and design consultations and proposes amendments to the Corporations Act 2001 and the Australian Securities and Investment Commission Act 2001 covering the following:

• Reporting entities: those with Corporations Act Chapter 2M reporting obligations meeting prescribed thresholds
• Phasing: timing of first reporting based on size or level of emissions
• Reporting content: as required by Australian Sustainability Reporting Standards
• Reporting framework: within a sustainability report in the annual report and lodged in accordance with current annual reporting requirements
• Assurance requirements: phased approach ending with reasonable assurance of all climate-related financial disclosures made from 1 July 2030 onwards.
• Liability framework: modified liability approach to disclosures of Scope 3 emissions and climate-related forward-looking statements

For some entities (Group 1), the first sustainability report will be issued for annual periods starting 1 July 2024 or 30 June 2025 year end.

The Government is seeking feedback on whether delaying to a 1 January 2025 commencement date for Group 1 entities would improve the quality of reporting during the transition year.

Further details are set out in this Reporting Update.

Treasury is seeking views on the Exposure Draft legislation and accompanying explanatory materials by 9 February 2024. Submissions should focus on whether the Exposure Draft legislation and explanatory materials appropriately reflect and give effect to the policy intent outlined in the Policy Statement.