By Alice Uribe
SYDNEY–Over 600 of Australia’s biggest companies could be the first to report on their responses to climate change under new disclosure rules, EY Australia estimates show, shedding more light into corporations’ progress toward environmental targets.
Australian authorities in June released a consultation paper proposing reforms to require Australia’s large business and financial institutions to give more information on how they are reacting to climate change, and reducing greenhouse-gas emissions.
Under the proposed timeline, the federal government said the mandatory reporting requirements would kick in from July 1, 2024 for Australia’s largest listed and unlisted companies, and financial institutions. Other smaller businesses and entities would follow suit over time as part of a phased rollout, authorities said.
Meg Fricke, partner at EY Climate Change and Sustainability Services, said the paper provides more clarity on when different entities might report, setting thresholds for disclosure based on things like employee numbers, assets owned and revenue earned.
“It really signified who was going to be captured, when they were going to be captured,” she told The Wall Street Journal in a recent interview.
Globally, there has been a push for more consistent, comparable corporate-sustainability information amid a lack of consensus on what to report and a proliferation of different guidelines and standards.
Based on EY’s estimates, Fricke said there appeared to be over 600 companies in Australia across a wide range of sectors that would fit into the first reporting cohort, known as Group 1, which would likely start making disclosures from 2024-2025 onward.
EY’s estimates are pending final guidance from Australia’s Treasury, particularly on which entities will form part of a consolidated group, she said.
Treasury hasn’t commented on the estimates.
While some of the potential companies in the first cohort are already reporting on climate efforts, Fricke said more needs to be done.
“In Group 1, whilst we have seen a recent uptick in reporting aligned to Task Force on Climate-related Financial Disclosures, reporting on climate risk is still a significant gap for many Group 1 companies, and importantly most who do report do not obtain assurance, which will be required under the proposed standard,” she said.
The TCFD is a widely-used framework for disclosing climate-related risks, one of many in existence as a lot of corporate climate reporting remains voluntary, though many governments are taking steps to start mandating disclosures.
Under Australia’s proposed reforms, the entities under other cohorts would have a longer time to prepare for disclosures.
Katelyn Adams, a corporate advisory partner at advisory and accounting firm HLB Mann Judd, said that the businesses under Group 3 aren’t ready for climate disclosures yet, and recommended that they should start preparing.
“There’s been a lot of guiding on boards and just the initial establishment of ESG [environment, social, corporate governance] committees and then trying to help align business and ESG principles so they can report on things that are meaningful to the business,” she said.
Australian authorities had said in June that the proposed climate reporting rules would form part of the country’s broader sustainable-finance framework.
“This will include a sustainable-finance taxonomy, along with further initiatives to tackle greenwashing and strengthen transparency of sustainability‑related financial products and markets,” the government said at the time.
Authorities are finalizing policy positions based on feedback to the reforms received to date. It is expected that Treasury will consult on exposure draft legislation later this year.
Write to Alice Uribe at [email protected]
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