In August 2024, Australia passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 with key focus on climate risk disclosures (mandatory), accountability and global alignment. The legislation introduces critical reforms that can also bolster Australia’s positioning as the key destination for inflow of the international capital.
Under the new bill, large Australian companies—both listed and unlisted—will be required to provide standardized climate information starting in 2025. ASIC, Australia’s corporate watchdog, will also establish a team to administer and oversee compliance under the new obligations.
The new legislation brings in the following provisions around climate reporting / sustainability:
- Dual-Scenario Reporting: A Comprehensive Approach
Companies must disclose climate resilience assessments based on both 1.5°C and 2.5°C warming scenarios. This dual-scenario approach ensures a comprehensive evaluation of existing climate risk strategies. By considering the range of potential temperature increases, businesses can better prepare for a changing climate.
- Global Alignment
The Australian Sustainability Reporting Standard will be closely aligned with International Financial Reporting Standards (IFRS) and is expected to be developed by Australian Accounting Standards Board (AASB) very soon.
- Investor Responsibilities
Expanding the scope beyond corporates, the asset owners managing over $5 billion will be brought under the climate risks reporting by 2027. This requirement underscores the broader market’s role in transitioning to a low-carbon economy. Investors play a vital role in fostering sustainable practices and guiding corporate behaviours.
Historical Context and Road Ahead
The bill’s journey began with its first reading in parliament on March 27, 2024. Stakeholders—including policymakers, industry experts, and environmental advocates—contributed insights during parliamentary committees. The final version, passed by the Australian Senate in August 2024, reflects the nation’s commitment to addressing climate-related financial risks.
As Australia embraces these reforms, it reinforces its dedication to sustainable financial practices and climate resilience. Transparency, accountability, and global alignment are the cornerstones of this legislation, paving the way for a more resilient and responsible future.
