From 1 January 2025, many large Australian businesses and financial institutions will need to prepare annual sustainability reports containing mandatory climate-related financial disclosures, following the passage of a major bill through Parliament.
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) passed Parliament on 9 September 2024 and received Royal Assent on 17 September 2024.
ASIC Commissioner Kate O’Rourke urged those entities captured by the rollout to proactively engage with these mandatory climate reporting requirements.
‘Large businesses and financial institutions should ensure that they implement appropriate governance arrangements and sustainability record-keeping processes ahead of the mandatory climate reporting requirements taking effect from 1 January 2025,’ said Commissioner O’Rourke.
‘This is a significant reform that will have far-reaching implications for many of our key stakeholders. ASIC recognises there will be a period of transition as organisations develop the capabilities required to comply. We will take a proportional and pragmatic approach to supervision and enforcement as industry adjusts to these new requirements.’
Throughout this transition, ASIC will continue to ensure current disclosure and governance standards in relation to voluntary sustainability disclosures are maintained and that entities comply with their existing legal obligations. This includes the longstanding prohibition against misleading and deceptive conduct.
To assist reporting entities, ASIC has established a dedicated sustainability reporting page on the ASIC website to provide information about the new regime and how ASIC will administer it. We encourage reporting entities to refer to this page as an ongoing resource as it will be updated with further information and regulatory guidance.
ASIC will consult with stakeholders on issuing new and/or updated regulatory guidance to assist them in complying with their sustainability reporting obligations. This will include specific guidance about ASIC’s approach to relief from the sustainability reporting obligations as well as how the regime will interact with existing legal and regulatory requirements.
Commissioner O’Rourke said, ‘As more people consider environmental sustainability when making financial decisions, climate disclosure will continue to grow in importance. Enhanced climate disclosure will also benefit reporting entities themselves, enabling them to better understand their climate-related risks and opportunities over the short, medium and long term.’
The mandatory climate reporting requirements will be phased in over the next three years across three groups of reporting entities, with the first reporting cohort required to prepare annual sustainability reports for the financial year commencing on or after 1 January 2025. The second and third reporting cohorts are required to prepare annual sustainability reports for the financial years commencing on or after 1 July 2026 and 1 July 2027 respectively.
ASIC is urging all reporting entities, including those in the second and third reporting cohorts, to begin preparing for the new climate disclosure regime.