The Australian Government has confirmed that climate-related disclosures will be mandatory for large businesses and financial institutions. The requirements will be phased in by cohorts, starting with large emitters and large reporting entities for the reporting period commencing on 1 July 2024.

The mandatory climate disclosures are in the process of being developed by the Australian Government and will be based on the International Sustainability Standards Board (ISSB)’s climate standard, IFRS S2.

 

Climate disclosure is an opportunity to demonstrate how companies are building long-term value.

Climate change is no longer only an ethical and environmental issue but offers financial risks and opportunities for companies – across short, medium and long terms. The shift has been driven by institutional investors, debt finance, regulators, market and community expectations.

Today, many employees also see their company’s environmental impact as an important factor impacting their choice of employer.

Climate change creates two primary financial risks: the physical impacts of a changing climate; and risks in the transition to a net zero emissions economy.

 

Get climate change on the agenda for the next company board meeting.

There are important questions to start with such as ‘What is climate change’ that will enable the board to discuss climate-related risks or opportunities and have a deeper conversation. This is the foundation of establishing good governance structures, considering strategy and risk, and reporting and discloser.

The duties and expectations of you as a director are to gain awareness, embed climate considerations into board decision-making, and understand and act upon the risks and opportunities of how climate change impacts your company.

Joe Longo, the chair of the Australian Securities and Investments Commission (ASIC) states “This shift to mandatory climate-related disclosure presents the biggest change to corporate reporting in a generation. Navigating these issues will require concerted focus and investment by companies. Getting started early is critical, as is a recognition that the quality and depth of reporting will mature over time” (AICD, 2023, p.2).

 

BYRONS are committed to ESG and offers Climate Disclosure support services aligned to your business and industry sector as part of our Audit and Assurance services. Contact us to find out more.

 

Sources and useful information

The director’s guide to mandatory climate reporting provides practical guidance to Australian directors to effectively oversee the transition to mandatory climate reporting:  https://www.aicd.com.au/risk-management/framework/climate/a-directors-guide-to-mandatory-climate-reporting.html

The ‘Climate risk governance guide: An introductory resource for directors on climate risk governance’ provides a plain-language introduction to fundamental climate change concepts, and considers this issue in the context of the non-executive directors’ role and duties:  www.aicd.com.au/content/dam/aicd/pdf/news-media/research/2021/climate-risk-governance-guide-web.pdf

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