A bill introducing mandatory climate reporting for large and medium-sized companies passed the Australian Senate today, marking a major step towards the establishment of a new climate risk disclosure framework in the country.

In a statement following the vote in the Senate, Australia Treasurer Jim Chalmers said:

“These critical reforms provide investors and companies the clarity and certainty they need to support the net zero transformation and further strengthen Australia’s reputation as an attractive destination for international capital.”

Launched earlier this year, the new proposed legislation would introduce climate-related reporting requirements broadly in line with the recently-released standards by the IFRS Foundation’s International Sustainability Standards Board (ISSB), including disclosures on climate-related risks and opportunities, and on greenhouse gas emissions across the value chain.

The establishment of mandatory climate disclosure requirements for companies forms the first step in the Albanese government’s sustainable finance strategy, outlined in June with the release of the government’s Sustainable Finance Roadmap, aimed at developing and reforming financial markets to support the mobilization of private capital needed to finance the transition to a net zero economy. Additional priorities under the Roadmap included establishing a sustainable finance taxonomy, and instituting a labeling regime for sustainable investments.

Under the initial draft, the new proposed legislation would apply to all public companies and large proprietary companies required to provide audited annual financial reports to the Australian Securities and Investments Commission (ASIC) that meet specific size thresholds, starting with companies with over 500 employees, revenues over $500 million or assets over $1 billion, as well as asset owners with more than $5 billion in assets, followed two years later by medium-sized companies (250+ employees, $200 million+ revenue, $500 million assets), while smaller companies (100+ employees, $50 million+ revenue, $25 million+ assets) would begin a year later. Reporting requirements for the first wave of companies would begin from the start of 2025.

The Australian Accounting Standards Board (AASB) is currently in the process of developing the internationally-aligned climate disclosure standards for Australian companies, which are expected to be issued shortly, and the Australian Auditing and Assurance Board (AUASB) is developing assurance standards for climate disclosures in late 2024.