The Australian Senate has passed a historic mandatory Climate Reporting Bill, which is expected to clear the government-controlled House of Representatives in the September session. The new legislation will require specific organisations to disclose their climate-related risks and opportunities, starting with the largest emitters and corporations on 1 January 2025.
The mandatory climate reporting will be phased in, beginning with the largest companies and financial institutions (Group 1 entities) in 2025. This will be followed by Group 2 entities on 1 July 2026, and Group 3 entities on 1 July 2027, with thresholds based on organisational size. While charities are exempt from this regime, other Not-for-Profits that meet size criteria will be included.
Disclosures must be made annually in a “Sustainability Report” as part of the entity’s Annual Reporting suite, in compliance with the Australian Sustainability Reporting Standards (ASRS). Directors will need to confirm that the report aligns with legislation, though for the first three years, they will only need to confirm that “reasonable steps” have been taken to comply.
To encourage comprehensive reporting, the bill includes a three-year modified liability period, with regulator-only enforcement for forward-looking disclosures during this time. This period covers all forward-looking disclosures under the ASRS for the first year and additional disclosures like scope 3 emissions, scenario analysis, and transition planning for the first three years.
A significant amendment was made to secure Senate support, requiring organisations to conduct at least two mandatory climate scenarios in their analysis: one consistent with limiting warming to 1.5 degrees Celsius and another exceeding 2 degrees.
The climate reporting legislation applies to entities that already prepare financial reports under the Corporations Act and meet specific size thresholds. It also extends the Australian Securities and Investments Commission’s (ASIC) financial reporting relief powers to climate reporting.