Australia: Climate and Sustainability-Related Financial Disclosure Reforms on the Horizon

By Jim Bulling and Anabelle Weinberg

1. Australian Government consults on climate-related financial disclosure framework

The Australian Government has released a consultation paper seeking feedback on the design and implementation of their commitment to a standardised, internationally-aligned climate-related financial disclosure framework.  The framework proposes a ‘phased’ approach where the increased disclosure obligations apply initially to large, listed entities and financial institutions, and be later expanded to smaller firms. 

The proposed regime could commence as early as 2024, with the first reports being required for the 2024-2025 financial year. 

Submissions on the consultation paper are due by 17 February 2023. 

2. Australian Accounting Standards Board (AASB) to set sustainability standards

Additionally, the Australian Government has released Exposure Draft Legislation to empower the AASB to set sustainability reporting standards.

These standards are intended to ensure large businesses provide investors with greater transparency and accountability when it comes to their climate‑related plans, financial risks, and opportunities. The draft bill can be found here.

3. ASIC Commissioner highlights expectations in relation to sustainability-related disclosures

In addition to the above announcements, ASIC Commissioner, Sean Hughes, has warned that ASIC will be ‘focused on the oversight of sustainability-related disclosure and governance practices of listed companies, managed funds, superannuation funds and [the issuers of] green bonds’.  ASIC is concerned by the lack of consistency, comparability and structure in disclosure practices by larger listed companies.

ASIC has encouraged directors to consider what governance structures might be required to be developed now to best support adherence to future disclosure and reporting practices.