Mandatory Climate-Related Financial Disclosures

Climate Reporting Legislation Passed by Parliament

On 9 September 2024, the legislation to enact Australia’s mandatory climate-related financial disclosure regime was passed by Parliament, which will be effective for financial years beginning on or after 1 January 2025.

As big as the change and the work that comes from this announcement will be, this is also a momentous moment for the transition to net zero.

This legislation will enable financial stakeholders and markets to be more fully informed of climate-related risks and opportunities and will ultimately support investment in creating a low carbon economy.

Described by ASIC Chair, Joe Longo, as the ‘biggest change to financial reporting in a generation’, we’re now seeing those who have been proactive already reaping the rewards, and those who have yet to start experiencing increased compliance costs and heightened risk.

What does this mean for you?

• For Group 1 entities, reporting periods commencing on or after 1 January 2025 will be required to include detailed disclosures about your climate-related risks and opportunities in line with the Australian Sustainability Standard Board (ASSB) S2. Group 2 and 3 entities will be phased in from 1 July 2026 and 2027.
• Disclosures must be made annually in a sustainability report, as part of your annual reporting suite. They must also be issued on the same date as your financial reporting.
• Your first year of disclosures will also have assurance requirements, limited assurance is required for your scope 1 and 2 emissions in the first year. Pending exact phasing, this will grow to eventually be reasonable assurance over the full disclosure.
• Directors will be required to state whether, in their opinion, the company’s sustainability report complies with the legislation.

What should you do to prepare?

• Have a conversation at the board and executive management level about your level of preparedness. Consider whether you need a briefing session or specialist training to bring this group up to speed.
• Undertake a readiness assessment so you can clearly see the work ahead. The insights from the readiness assessment can inform a climate disclosure roadmap.
• Ensure you have the right partners to support you, this may include specialist climate consultancy, as well as engaging with your financial audit and legal counsel partners.

Does your advisor on climate risk and disclosure really have the experience to support you on your ASRS journey?

Edge Impact is here and ready to support you and your company in making your own contribution in this transition.

The top 3 questions we get asked about Climate Risk Assessments

Join Dr. Mark Siebentritt, our Global Climate Practice Lead, as he addresses:

1. Getting Started: Learn how to initiate your climate risk assessment with a structured approach.
2. Information Sources: Discover where to find the essential data needed for accurate assessments.
3. Selecting Scenarios: Understand how to choose the right climate scenarios for your business needs.
   
   

Learn more about our Readiness Assessment & Roadmap service in our downloadable guide.

How to comply with the new standards

To help you prepare for this transition, we've developed a variety of practical guides, tools, and articles.

Each resource is expertly designed to lead you through every step of the reporting process, ensuring a smooth and comprehensive compliance journey.

The Edge Impact ASRS Readiness Assessment & Roadmap service

Depending on the size and complexity of your organisation, the process of identifying material climate risks and opportunities and understanding their potential impact on financial performance can take a significant amount of time and effort.

However, if done effectively, the benefits of this process can extend well beyond compliance to disclosure standards, providing key strategic and operational advantages.

Importantly, the first and most significant step is understanding what you already have in place and what additional actions are required to comply with the new standards.

This can be completed through the Edge Impact Australian Sustainability Reporting Standards Readiness Assessment.

Benefits of completing a readiness assessment:

• Early engagement and upskilling of leadership.
• Confirmation of relevant reporting jurisdiction and associated standards.
• Detailed planning of internal and external resourcing requirements, including budgeting and recruitment requirements to meet reporting deadlines.
• Coordination and allocation of responsibilities between business functions, including finance, risk, executive and board.
• Integration of climate risks into enterprise risk management process.
• Reduce future compliance costs through building team capability.

Upcoming Mandatory Climate-Related Financial Disclosures

Max Van Biene, Global Head of Client Impact at Edge Impact,
explores the upcoming Mandatory Climate-Related Financial Disclosures:

How to Thrive in The New Era of ESG Disclosure

Edge Impact's ESG Disclosure Discussion Paper

Regulatory body ASIC has encouraged organisations to start to prepare early, and will be providing further support and resources over the coming months.

Our Discussion Paper offers a clear guide on what a three-phase roadmap to compliance looks like.

Co-authored by our team of sustainability experts, this publication serves as an introductory guide and provides organisations with:

• A Forward-Focused Perspective: Gain insights into the new era of ESG disclosure and its implications for your organisation, positioning you for a successful future.
• Build a Strong Foundation: Learn how to develop a robust 3-year disclosure roadmap to safeguard your organisation from risks and capitalise on opportunities.
• Practical Steps for Immediate Action: Discover actionable strategies that organisations can implement to prepare for the upcoming mandatory reporting obligations.

Roadmap to Compliance: Navigating Mandatory Climate-Related Financial Disclosure

Mark Siebentritt, Global Practice Lead, Climate, alongside industry experts explore the critical aspects of mandatory climate-related financial disclosure and discusses the practical implications of upcoming reporting regulations for sustainability teams, finance teams, and risk teams alike.

As the compliance deadline for Group 1 entities in 2025 approaches, it is crucial not only to grasp the theoretical aspects but also to understand the actionable steps organisations must take.