This text was co-authored with Charlie Bevis.
On 27 March 2024, the Australian Authorities launched the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) (Invoice) to Parliament. The Invoice consists of up to date laws setting out the federal government’s proposed climate-related monetary disclosure (CRFD) regime. On this replace, we recap the important thing provisions of the proposed CRFD regime and spotlight the important thing modifications to the regime because the Treasury’s publicity draft of January 2024.
A recap on Australia’s deliberate climate-related disclosure regime
Underneath the federal government’s proposed climate-related disclosure regime, firms which put together annual monetary experiences below Chapter 2M of the Firms Act 2001 (Cth) (Firms Act) and meet sure thresholds will probably be required to submit a ‘sustainability report’ as a part of their annual monetary experiences. This might want to embody:
- a local weather assertion for the 12 months;
- any assertion prescribed by the rules for the 12 months;
- notes on both (i) or (ii); and
- the administrators’ declaration as to the compliance of the statements with the related sustainability requirements.
The local weather statements will initially solely have to be audited to the extent required by the Australian Accounting Requirements Board (AASB) with a transition to full auditing for all reporting entities from 1 July 2030. The Auditing and Assurance Requirements Board (AUASB) not too long ago launched a Consultation Paper for public remark to help it in creating auditing requirements that can apply to the CRFD regime. Touch upon the AUASB Session Paper is open till 3 Could 2024.
The regime will probably be phased in over a number of years throughout three teams of entities, which is able to fall below the regime’s remit on completely different deadlines. As one of many reporting deadlines has now modified, please see the next part for a desk displaying all the most recent group thresholds and deadlines.
We outlined the CRFD regime intimately when the Treasury’s publicity draft was launched in January 2024. That article will be discovered here (noting that some elements of the regime have since been up to date, as set out under).
Delayed graduation of reporting
The principle change to the CRFD regime launched within the Invoice is that the proposed begin date of the regime has been shifted again by at the very least six months and as much as 12 months, relying on when the act to introduce the CRFD regime commences. Because of this the reporting obligation for Group 1 entities will come up on 1 January 2025, the place the act commences on or earlier than 2 December 2024, or 1 July 2025 if the act commences between 3 December 2024 and 1 June 2025.1 No extra aid is offered to Group 2 and three entities, with their respective obligations arising on 1 July 2026 and 1 July 2027, respectively.2
| First annual reporting intervals beginning on or after | Massive entities and their managed entities assembly at the very least two of three standards: | Nationwide Greenhouse and Vitality Reporting (NGER) Reporters | Asset Homeowners | ||
| Consolidated income | EOFY consolidated gross property | EOFY staff | |||
|
1 January 2025 |
$500 million or extra | $1 billion or extra | 500 or extra | Above NGER publication threshold | N/A |
| 1 July 2026 Group 2 |
$200 million or extra | $500 million or extra | 250 or extra | All different NGER reporters |
$5 billion property below administration or extra |
| 1 July 2027 Group 3 |
$50 million or extra | $25 million or extra | 100 or extra | N/A | N/A |
As earlier than, asset house owners whose worth of property is the same as or higher than $5 billion on the finish of the monetary 12 months will fall below Group 2.
Lastly, it stays the intention of the CRFD regime to permit the smallest in-scope entities to keep away from having to finish a full standardised disclosure the place they don’t have materials climate-related dangers or alternatives (however they may nonetheless want to incorporate a press release to this impact).3
Modified legal responsibility regime
The modified legal responsibility regime will present restricted immunity in relation to the making of “protected statements”, which is able to embody statements in a sustainability report (or statements in an auditor’s overview of a sustainability report) that are made for the aim of complying with a sustainability normal or assurance normal about:
- scope 3 GHG emissions;
- state of affairs evaluation (throughout the which means of the sustainability requirements); and
- transition plans (throughout the which means of the sustainability requirements).4
The immunity will apply for a interval of three years after the graduation of the act. Throughout the immunity interval, reporting entities will probably be immune from civil fits in relation to protected statements, however can nonetheless be topic to motion from ASIC and felony proceedings.
Moreover, a restricted immunity interval of 12 months will apply for statements made in a sustainability report (or an auditor’s overview of a sustainability report) that relate to local weather and are ahead trying.5
Timing and subsequent steps
The Invoice has now been referred to the Senate Economics Committee, which should report on the Invoice by 30 April 2024.
individuals will have the ability to make submissions throughout this era, nevertheless the deadline for doing so is but to be confirmed.
How we are able to help you
If you want extra data on how the introduction of necessary climate-related monetary disclosures would possibly have an effect on your present operations or future tasks, or would really like help with getting ready a submission to the Senate Economics Committee, please contact a member of our ESG group.
For additional ESG-related insights, please go to our ESG homepage linked here.
