Australia’s Senate passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) yesterday, marking the beginning of a new mandatory climate disclosure regime (Regime) from 2025.
Our note on the lessons for Australian entities can be found here.
Who should read this? Why?
It is expected that over 6,000 Australian entities will be required to report by 2030, where it is likely that New Zealand subsidiaries of these Australian entities will also be captured by the regime, creating a reporting obligation under the Regime. Directors of New Zealand companies with an Australian connection should also monitor developments.
What does it cover?
The Regime will ensure that Australian entities keep up with a global shift towards mandatory climate reporting and retain an attractive position amongst other climate reporting players in global capital markets. Australia also follows behind the lead of New Zealand’s Climate Related Disclosure (CRD) regime, where the learnings of New Zealand Climate Reporting Entities (CREs) will be useful to the successful implementation of the Australian Regime.
The Australian Accounting Standards Board (AASB) is expected to finalise the Australian Sustainability Reporting Standard (Standards) which will set out all aspects of the Regime, in the next couple of weeks. The AASB will prioritise global consistency and comparability, closely aligning the requirements of the Regime with the International Financial Reporting Standards (IFRS).
The Regime will implement three reporting groups under Chapter 2M of the Corporations Act 2001 with reporting obligations on entities based on the commencement on their financial year, as follows:
- Group 1 entities: 1 January 2025 – 30 June 2026.
- Group 2 entities: 1 July 2026 – 30 June 2027.
- Group 3 entities: 1 July 2027 – 30 June 2028.
Scenario analysis disclosures are a significant addition to the Regime following the Senate’s amendments to the Bill set before the House of Representatives on 27 March 2024. Entities will now be required to use the following scenarios:
- A low warning scenario: global average temperatures limited to 1.5°C above pre-industrial levels.
- A high warning scenario: global average temperatures exceed 2.5°C above pre-industrial levels.
These amendments will be important for reporting entities in ensuring that their existing scenario analysis affords adequate consideration to the scope of these scenarios. The remainder of the March 2024 Bill remains unchanged.
What next?
We encourage New Zealand companies with a connection to Australia to follow the development of their regime and check whether they may be required to report under that regime once it comes into force.
For more information, see these newsletters issued by our Australian sister firm MinterEllison.
This article was co-authored by Hannah Cross (Solicitor) and Andrew Walker (Law Clerk) in our Financial Services team.
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