Australia is advancing its corporate transparency by implementing mandatory climate- related financial disclosures, aligning with global standards set by the International Sustainability Standards Board (ISSB). This initiative aims to provide investors and stakeholders with consistent, comparable, and reliable information on companies' climate- related risks and opportunities.
In September 2024, the Australian Parliament passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, amending the Corporations Act 2001 to mandate sustainability reporting. This legislation requires certain entities to include climate statements in their annual reports, with the scope expected to expand to other sustainability topics in the future.
Concurrently, the Australian Accounting Standards Board (AASB) issued two key standards:
The mandatory reporting will be phased in over several years, and categorised into three groups based on size and other criteria:
Entities meeting at least two of the following thresholds: consolidated revenue of $500 million or more, consolidated gross assets of $1 billion or more, or 500 or more employees. Reporting commences for financial years starting on or after January 1, 2025.
Entities with lower thresholds, such as consolidated revenue of $200 million or more, consolidated gross assets of $500 million or more, or 250 or more employees. Reporting begins for financial years starting on or after July 1, 2026.
Entities meeting the lowest thresholds, including consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees. Reporting starts for financial years beginning on or after July 1, 2027.
Entities are required to disclose information across four pillars:
Processes, controls, and procedures to monitor and manage climate- related financial risks and opportunities.
Assessment of material climate-related risks and opportunities affecting the business model and value chain, including the impact on financial position and performance.
Processes for identifying, assessing, and managing climate- related risks and opportunities.
Disclosure of greenhouse gas emissions (Scope 1 and 2 from the first year; Scope 3 from the second year), and progress against climate-related targets.
The Auditing and Assurance Standards Board (AUASB) is developing assurance standards for sustainability reports, with a phased approach leading to reasonable assurance of all climate-related disclosures by financial years commencing on or after July 1, 2030.
Australia's approach closely mirrors international developments, particularly the ISSB standards, ensuring consistency with global best practices. This alignment facilitates comparability for investors and supports Australia's commitment to a net-ero economy by 2050.
Research indicates that investors are increasingly prioritiing sustainability, with 69% more likely to invest in companies managing sustainability issues effectively. However, 94% express concerns about the reliability of current sustainability disclosures, underscoring the need for standardied reporting frameworks like the ASRS.
Australia's implementation of the ISSB-aligned sustainability reporting standards represents a significant advancement in corporate transparency and accountability. By mandating comprehensive climate-related disclosures, Australia is positioning itself at the forefront of global efforts to address climate change through informed investment and corporate practices.
