The Australian government has introduced new laws that will require large companies to report on climate risks, targets, and greenhouse gas emissions starting in 2025. The legislation aims to encourage investment in clean energy and help investors and companies manage climate risks. The reporting requirements will initially apply to Australia’s largest companies but will eventually extend to medium and smaller companies.
The Treasury Laws Amendment Bill includes compulsory climate reporting requirements for major companies and establishes a framework to protect the financial market infrastructure during crises. The legislation will introduce standardized, internationally-aligned reporting requirements to ensure high-quality climate-related financial disclosures. This will provide investors and companies with the transparency, clarity, and certainty they need to invest in new opportunities as part of the net-zero transformation.
The reporting requirements will begin on January 1, 2025, for large listed and unlisted companies. Over time, other large businesses will be phased in. The bill outlines the criteria that companies must meet to be required to disclose climate-related information, such as revenue thresholds, asset values, and employee numbers.
Companies will need to include a climate statement in their sustainability reports, along with their financial statements. The climate statements must disclose all material financial risks and opportunities related to the climate. They must also include metrics and targets related to greenhouse gas emissions and provide information on governance and risk management related to these targets. Small entities that do not have material climate-related risks or opportunities may be exempt from complete standardized climate disclosures.
In addition to the climate reporting requirements, the legislation also includes reforms to empower the Reserve Bank of Australia (RBA) to intervene and resolve issues affecting financial markets. These changes aim to ensure continuity of clearing and settlement services in the face of a crisis.
While the government emphasizes the benefits of a renewables-focused approach, some opposition leaders have raised concerns about the potential impacts on the cost of living. They argue that Labor’s renewables-only obsession is causing energy bills to skyrocket and pushing families into energy poverty. The national energy regulator warns that 90% of Australia’s existing baseload energy, which supports renewables, will leave the grid by 2034. However, the government argues that renewables are the cheapest form of new energy and defends its market-led approach.
Overall, the introduction of mandatory climate reporting by the Australian government is a significant step towards addressing climate risks and promoting investment in clean energy. It provides transparency and certainty for investors and companies while also protecting the financial market infrastructure during crises. However, there are ongoing debates about the potential impacts on the cost of living and the reliance on renewables. As the legislation progresses, it will be important to carefully balance these concerns with the need for sustainable and resilient economic growth.
