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Second consultation opens on climate-related financial disclosures

By Keith Ford
3 minute read

The government has opened a second consultation on climate-related financial disclosures.

Following a previous consultation between December 2022 and February 2023, the government released a second consultation paper on Tuesday, which will run until 21 July 2023.

The consultation will cover detailed proposals that will help Australian companies and investors to “maximise economic opportunities in the shift to cheaper, cleaner, and more reliable energy, and to manage climate risks”.

In a joint statement, Treasurer Jim Chalmers, Financial Services Minister Stephen Jones, and Minister for Climate Change and Energy Chris Bowen said the changes will give companies the “confidence, clarity and certainty they need to invest, creating more jobs and opportunities for people in more parts of the country”.

“The consultation paper released today is the next step in delivering the government’s commitment to ensuring Australia’s large business and financial institutions provide more information and greater transparency on how they are responding to climate change and contributing to the net zero transformation,” the statement said.

“The proposals reflect feedback from industry, investors, financial regulators and the broader community, and public consultation is being undertaken for the next stage of this important work.”

The ministers added that businesses and investors would benefit from greater clarity on how climate-related risks and opportunities should be reported.

“The consultation paper builds on existing climate disclosure practices in Australia to improve breadth, quality and sophistication of climate disclosures across a wider range of companies,” the statement said.

“At the same time, the proposals aim to ensure companies are afforded time to build internal capability and expertise to support climate disclosure.”

The proposed implementation approach includes:

  • Mandatory reporting requirements commencing from 1 July 2024 for Australia’s largest listed and unlisted companies and financial institutions, with other businesses subject to the requirements over time.
  • A three-year transitional period, with regulator only action against directors and reporting entities in relation to forward looking statements and scope 3 emissions possible during this time.
  • Broad alignment with international climate disclosure standards.

“The government is committed to working with business, industry groups and the broader community to ensure we get these settings right,” the ministers said.

“The proposed climate reporting regime will form part of Australia’s broader sustainable finance framework. This will include a sustainable finance taxonomy, along with further initiatives to tackle greenwashing and strengthen transparency of sustainability-related financial products and markets.”

In May, the government announced its commitment to legislate a national net zero authority, which will work with state, territory and local governments, existing regional bodies, unions, industry, investors and First Nations groups to help key regions, industries, employers and others proactively manage the transformation to a clean energy economy.

The government also announced the appointment of Greg Combet as chair of its new Net Zero Economy Agency in June.

Commencing from 10 July, Mr Combet will guide the agency to ensure that relevant workers, industries, and communities can “seize the opportunities of the net zero transformation”, the government said in a statement.