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The Treasury Laws Amendment bill, which would mandate large and medium-sized companies to report on climate-related risks and opportunities as well as greenhouse gas emissions across the value chain, was passed by the Australian House of Representatives today. The largest companies would be required to start reporting as early as 2025.
The decision, which comes after the Senate approved the bill in August, is the final significant legislative step before the new climate reporting standards become law.
Additionally, the House passed a new law creating the Net Zero Economy Authority, which will be in charge of directing the nation’s economic transition to net zero emissions, retraining workers for the energy transition, and liaising with business and investors regarding potential transformations.
Australian Treasurer Jim Chalmers presented new climate disclosure legislation in January 2024, establishing reporting obligations for climate-related matters that are mostly aligned with the newly issued guidelines by the International Sustainability guidelines Board (ISSB) of the IFRS Foundation. Internationally-aligned climate disclosure standards for Australian businesses are currently being developed by the Australian Accounting Standards Board (AASB) and should be released soon. In late 2024, the Australian Auditing and Assurance Board (AUASB) will begin developing assurance standards for climate disclosures.
The original draft legislation’s anticipated July 2024 commencement date has been pushed back to January 2025. The requirements for reporting will be applicable to all publicly traded companies as well as large proprietary firms that fall under certain size thresholds and must submit audited annual financial reports to ASIC. These thresholds include companies with more than 500 employees, $500 million in revenue, $1 billion in assets, or $5 billion in assets owned by asset owners. The reporting requirements will start in July 2026 for medium-sized firms (250+ workers, $200 million+ sales, $500 million assets), and one year later for smaller enterprises (100+ employees, $50 million+ revenue, $25 million+ assets).
Along with providing three years of litigation protection against Scope 3 disclosures, the legislation also includes a phased-in approach for Scope 3 reporting, giving businesses an additional year from the start of their disclosure requirements to report on the amount of their indirect value chain emissions.
The Albanese government passed Australia’s climate goals into law last year, with targets to achieve net zero by 2050 and reduce greenhouse gas emissions by 43% by 2030 compared to 2005 levels. Plans to establish Australia’s Net Zero Economy Authority were first proposed in May 2023. Supporting workers, especially in emissions-intensive industries, to access new skills and employment opportunities, assisting businesses and investors in engaging with net zero transformation opportunities, and assisting communities and regions in luring new clean energy industries in tandem with government policies and programs were among the main proposed focus areas of the new authority.