The Australian government released a consultation paper on the development of a climate risk disclosure framework for businesses and financial institutions, with plans to make the reporting rules mandatory for large entities, as reported by ESG Today on December 12. The consultation paper covers the scope, frequency, format, timing, and international alignment of the disclosure requirements. For instance, the government will solicit opinions to determine the size of businesses that will be subjected to the mandatory disclosure rules. According to Australian Treasurer Jim Chalmers, the disclosure rules should be mandatory for large firms and be aligned as far as possible with global standards. Chalmers also suggested the rules be applied not only to enterprises but also to financial institutions and comparable commonwealth entities. 

Australia’s Treasury pointed out that physical and transition climate risks are major risks to global finance, while disclosure can be key to managing the risk. The planned framework is also welcomed by leading finance industry bodies, including the Financial Services Council, the Australian Council of Superannuation Investors, and the Responsible Investment Association of Australasia. According to their joint statement, mandatory disclosure will help investors and customers make better decisions, regulators combat greenwashing, and businesses identify and manage sustainability-related risks and opportunities. The framework is a further move after Australia’s prudential regulator issued a climate risk guidance for banks, insurers, and pension funds in April 2022. The guidance asked these entities to consider and report on their plan for mitigating the impacts of climate-related risks with no mandatory requirements made. 

Sources:

https://www.esgtoday.com/australia-plans-mandatory-climate-reporting-for-companies/

https://www.smh.com.au/business/banking-and-finance/a-logical-step-finance-industry-backs-push-on-mandatory-climate-disclosure-20221212-p5c5kt.html

https://www.theguardian.com/australia-news/2022/dec/12/albanese-government-looking-at-laws-to-force-big-business-to-disclose-climate-efforts

https://www.themandarin.com.au/208508-consultation-paper-on-climate-risk-disclosure-open-for-comment/

https://www.reuters.com/business/environment/australian-regulator-issues-long-awaited-climate-risk-guidance-2021-04-22/