Australia’s new mandatory climate reporting legislation that takes effect on 1 January 2025 marks a pivotal shift for businesses in the country. The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, which received Royal Assent on 17 September, requires businesses that must lodge financial reports with the Australian Securities and Investments Commission to make climate-related financial disclosures in their annual reports. This includes evaluating their exposure under high and low global warming scenarios, ensuring a thorough analysis of potential risks, i.e., the legislation mandates reporting against a 1.5-degree warming scenario and a higher-risk scenario, which should ensure that companies consider both transition and physical climate risks, leading to more informed decision-making and strategic planning.
Under the new rules, entities will be categorised into three groups, with Group One entities required to start reporting for the year ending 31 December 2025. Group Two and Group Three entities will follow in subsequent phases.
Affected businesses should understand their reporting timelines and prepare accordingly to avoid last-minute compliance issues. They should also realise that the introduction of mandatory climate reporting presents a significant opportunity to enhance their strategic planning and risk management. Companies that proactively adapt to the new requirements will not only ensure compliance but also build resilience and attract investors seeking sustainable practices.
Aletta Boshoff
BDO in Australia
Under the new rules, entities will be categorised into three groups, with Group One entities required to start reporting for the year ending 31 December 2025. Group Two and Group Three entities will follow in subsequent phases.
Affected businesses should understand their reporting timelines and prepare accordingly to avoid last-minute compliance issues. They should also realise that the introduction of mandatory climate reporting presents a significant opportunity to enhance their strategic planning and risk management. Companies that proactively adapt to the new requirements will not only ensure compliance but also build resilience and attract investors seeking sustainable practices.
Aletta Boshoff
BDO in Australia