The Federal Government has released a consultation paper and has called for feedback from businesses and investors on its proposals to maximise the economic opportunities of the shift to cleaner energies.
Released on 27 June by Treasurer Dr Jim Chalmers, Minister for Climate Change and Energy Chris Bowen, and Assistant Treasurer Stephen Jones, the 31-page consultation paper is designed to give companies the confidence, clarity and certainty they need to invest while being more transparent on how they are responding to climate change and contributing to the net-zero transformation.
The release says the proposals in the paper have been drafted based on feedback from industry, investors, financial regulators and the broader community, and builds on existing climate disclosure practices designed to improve the breadth, quality and sophistication of climate disclosures.
The government says it has committed to ensuring large businesses and financial institutions provide greater transparency and accountability when it comes to their climate-related plans, financial risks and opportunities, and that it will introduce standardised, internationally aligned reporting requirements for businesses to make disclosures regarding governance, strategy, risk management, targets and metrics.
It notes that the International Sustainability Standards Board (ISSB) was established in 2021 to develop comprehensive baseline global standards for climate disclosure and sustainability reporting, and that this has become an important tool to manage both individual and systemic climate-related financial risks and disclosure of those risks.
From December 2022 to February 2023, the Treasury Department sought views on key considerations for the design and implementation of a standardised, internationally aligned requirement for disclosure of climate-related financial risks and opportunities in Australia. It received 194 submissions from peak bodies, businesses, individuals, academics, research institutes and public sector entities.
Following that process, Treasury is now leading consultation on the government’s commitment to standardise climate disclosures by large businesses and financial institutions, with close support from the financial regulators and standard-setting bodies.
To this end, it will seek views on proposed positions for the detailed implementation and sequencing of standardised, internationally aligned requirements for disclosure of climate-related financial risks and opportunities in Australia.
Views will be sought on whether the proposed positions relating to coverage, content, framework and enforcement of the requirements are workable. In line with the policy principles, the consultation will seek to ensure the new requirements are proportionately targeted and provide sufficient clarity as to the requirements of the regime.
Some of the reform principles include:
- Supporting Australia’s transition to net zero emissions by 2050; adaptation to a changing climate; and broader efforts and initiatives to promote a sustainable financial system in Australia and internationally.
- Improving information by providing clear improvements in the quantity, quality and comparability of disclosures.
- Ensuring businesses, investors, regulators and the public have a clear and common understanding about obligations for entities to disclose climate-related financial risks.
- Where possible, ensure the requirements are aligned with international reporting practices.
- New requirements should, where possible, build on the existing financial reporting system, and be scalable and flexible to accommodate future developments in the global baseline for climate and sustainability reporting.
- Climate disclosure requirements should be proportional to the risks they seek to address.
Treasury is also seeking the inclusion of information in submissions that support the costs and benefits of the proposals.