Australian Businesses Demand a One-Year Extension for Compulsory Climate Reports

The Business Council of Australia (BCA) has released a statement advocating for an extended period and expanded scope of immunity from liability related to the new disclosure requirements. The BCA believes that Australian companies should be given an extra year to prepare for compliance with a new proposed law requiring mandatory climate-related reporting.

The BCA supports a “training wheels” approach to the new climate-related disclosure regulations, giving businesses time to acquire the competencies required to guarantee the correct execution of the reporting obligations.

All public companies and large proprietary companies that meet certain size thresholds would be subject to the new proposed legislation, which would apply to all of them. 

Companies with more than:

• 500 employees, revenues over $500 million, assets over $1 billion, or asset owners with more than $5 billion in assets would be the first to begin reporting for fiscal years beginning on July 1, 2024. 
• Smaller businesses (100+ workers, $50 million+ sales, $25 million+ assets) would start reporting the next year, while medium-sized businesses (250+ employees, $200 million+ revenue, $500 million assets) would have to start reporting for years starting in July 2026.

The BCA submission calls for “appropriate liability safe harbours and transition periods,” “sufficient time for investment in systems and auditing capabilities to develop,” and “the continuous improvement in the quality of climate related financial disclosures.”

The Australian Accounting Standards Board (AASB) is currently working on finalizing the standards, therefore the BCA statement again emphasized the need for clarity on the reporting requirements that would be in effect.

In order to allow cross-jurisdictional comparisons and reduce reporting firms’ compliance costs, the BCA statement also strongly supports tight alignment between the future standards of the AASB and the newly issued standards of the IFRS International Sustainability Standards Board (ISSB). The AASB’s suggestions, although grounded in the ISSB rules, involve a number of changes, including to reporting requirements for firms that do not have significant financial risks or opportunities connected to climate change, and to Scope 3, or indirect value chain emissions reporting.

The extension and enlargement of liability relief under the proposed legislation is a significant recommendation in the report. Using a “modified liability approach,” the government’s draft law places a temporary hold on responsibility for “the most uncertain parts” of the new reporting obligations, such as scenario analysis and Scope 3 emissions, until mid-2027. The BCA comments ask that the approach incorporate all forward-looking statements, “include a high bar for civil actions,” and prolong immunity until 2030, in line with the need for complete audit standards.