The Albanese government has published a consultation paper on the development of a new Australian climate risk disclosure framework.
In a joint statement released on Monday, Treasurer Jim Chalmers, Assistant Treasurer Stephen Jones, and Minister for Climate Change and Energy, Chris Bowen, said Australia would establish a framework for “consistent, credible, internationally comparable disclosures” amid rising investor demand for higher-quality reporting requirements.
“This internationally aligned framework will provide business and investors with the clarity and certainty they need to manage climate risks and invest in new opportunities,” they said.
“It will ensure large business and financial institutions are providing more information and greater transparency on how they are responding to climate change and supporting the transition to net zero.”
The reporting requirements are expected to be mandatory for large entities and will be phased in over time. The government also intends to apply appropriately tailored requirements to comparable Commonwealth public sector corporate entities and investment funds.
“The government will consult closely with industry, financial regulators and other stakeholders to develop an approach that is fit for purpose and ensures Australia is well positioned in global markets,” Mr Chalmers, Mr Jones and Mr Bowen added.
The consultation will remain open until 17 February 2023.
Responsible Investment Association Australasia CEO Simon O’Connor welcomed the announcement, which he said will bring Australia in line with other countries by supporting the finance sector to contribute to the nation’s prosperity.
“By reaffirming its commitment to mandatory corporate climate risk reporting, the government is supporting investors to make better decisions, to be able to compare apples with apples,” he said.
However, Mr O’Connor also argued that the Albanese government’s latest move is “just the start”.
“These climate disclosure standards must be clear and robust, to ensure investors can distinguish corporates with real commitment and outcomes from the illusion of tangible change,” he said.
“There should be scope to grow this reporting regime to broader sustainability performance — important areas such as upholding First Nations Peoples’ rights and protecting and restoring biodiversity. These matters are also front of mind for investors and are also shaping decisions on where they deploy their capital.”
Work begins on sustainable finance strategy
Also on Monday, the Ministers said the Treasury has been tasked with developing a comprehensive sustainable finance strategy that encompasses a range of measures to improve transparency, deepen Australia’s green finance markets, and seize opportunities presented by surging global momentum in sustainable finance.
As part of this, the government has also written to the Council of Financial Regulators, which includes the heads of APRA, ASIC, the Reserve Bank and the Treasury Secretary, to ask for their support for its broader agenda.
“The strategy will be developed in close coordination with these financial regulators, other Commonwealth departments and industry, and will be considered by government in early 2023 before a period of public consultation on key measures,” said Mr Chalmers, Mr Jones and Mr Bowen.
“The strategy will include the development of new standards or taxonomies for sustainable investment, further initiatives to reduce greenwashing and strengthen ESG labelling, and more ambitious participation in global forums to support climate and sustainable finance frameworks and investment, especially here in our part of the world.”