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Australia’s House of Representatives Passes Landmark Climate Disclosure Bill

This blog was originally posted on 10th September, 2024. Further regulatory developments may have occurred after publication. To keep up-to-date with the latest compliance news, sign up to our newsletter.

AUTHORED BY CELIA LE LIEVRE, SENIOR REGULATORY COMPLIANCE SPECIALIST, COMPLIANCE & RISKS

Introduction

On 9 September 2024, the House of Representatives passed a major draft legislation enacting Australia’s mandatory climate-related financial disclosure regime.

In this blog, we give an overview of Australia’s Climate Disclosure Bill.

Overview

The so-called Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 was introduced to Parliament in March 2024 and passed by the Senate with minor amendments on 22 August 2024.

By way of reminder, the Bill introduces phase-in climate-related financial reporting requirements for certain entities by way of an amendment to the Corporations Act 2001. Entities under the Corporations Act that meet certain minimum size thresholds and/or have emissions reporting obligations under the National Greenhouse and Energy Reporting (NGER) scheme will be required to disclose their climate-related risks and opportunities.

In so doing, these entities will need to prepare an annual sustainability report, including a climate statement, in accordance with the Australian sustainability disclosure standards (ASRS 1, ASRS 2 and ASRS 101) which are expected to be finalized in the coming weeks.

The commencement date for Group 1 entities is 1 January 2025. Note that the commencement date for Group 1 entities has been delayed by six months (from 1 July 2024 to 1 January 2025) for entities with a calendar financial year and a full year for entities with a financial year ending on 30 June. If passed, Group 2 entities and Group 3 entities will be required to report for each financial year commencing on or after 1 July 2026 and 1 July 2027, respectively.

A previous update in C2P contains more details on the size thresholds of companies and timelines of implementation: The Australian Senate Approves Landmark Climate Disclosure Bill.

As discussed above, the bill was approved by the Senate with only minor amendments to Schedule 4 which prescribes disclosure requirements related to scenario analysis.

The draft Australian disclosure standards require entities to use climate-related scenario analysis to assess the resilience of their strategy and business model to climate change. Entities shall then disclose how and when the climate-related scenario analysis was carried out and provide information about the inputs used by the entity, including which scenarios the entity used for the analysis and the sources of those scenarios.

In light of the above ASRS, the amendment introduced by the Senate requires reporting entities to carry out at least two scenario analysis for the purposes of disclosing scenario analysis information in climate statements:

The increase in the global average temperature well exceeds the increase mentioned in the Climate Change Act 2022 – 1.5°C (a low global warming scenario)
The increase in the global average temperature is limited to the increase mentioned in the Climate Change Act 2022 – 2.5°C (higher above pre-industrial levels).

The House of Representatives approved the Senate’s version of the bill with no further amendment. The final stage for the bill to become law is to receive Royal Assent. The bill is expected to receive Royal Assent very shortly.

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