Proposed mandatory climate-related disclosures:
The ESG measurement and reporting landscape is changing rapidly, in response to government legislation and consumer demand. Is your organisation prepared for the new requirements, especially in relation to Climate-related disclosures and Scope 3 reporting?*
In Australia, draft legislation has been released (January 2024) that requires large entities to prepare a sustainability report (within the annual report) containing climate statements that comply with the sustainability standards currently in development by the Australian Accounting Standards Board (AASB), commencing mid-2024. A phased approach over 3 years is planned, commencing with the largest organisations.
Small organisations may not have reporting obligations under the legislation, but if you supply goods or services to large businesses (e.g., supermarkets or manufacturers), they form part of the Scope 3 emissions of that reporting entity, and you will be asked to provide data on your emissions and climate-related activities, so that it can be included by the reporting entity. Scope 3 emissions reporting is required from the second year of the entity’s reporting.
Confused? Start by establishing whether your organisation is required to make mandatory reports under the proposed framework, then establish systems to collect the relevant data. If you are a small organisation that may be swept up in the Scope 3 reporting requirements, start doing your homework now, and access help to develop systems and train your staff.
Entities that are required to report under Chapter 2M of the Corporations Act (generally large publicly listed companies that are required to make annual financial reports to ASIC), and meet two of the three criteria:
|Over 500 employees
Consolidated gross assets of $1 billion or more
Consolidated revenue of $500 million or more
|Over 250 employees
Consolidated gross assets of $500 million or more
Consolidated revenue of $200 million or more
|Over 100 employees
Consolidated gross assets of $25 million or more
Consolidated revenue of $50 million or more
|Entities above the current NGER publication threshold.
|All other NGER reporters.
|Asset owners with $5 billion or more under management.
The Australian Accounting Standards Board (AASB) is currently developing the Australian climate disclosure standards. It is expected the sustainability reporting standards will include:
- Governance processes, controls, and procedures
- Strategy to identify and address climate related risks and opportunities
- Transition planning and climate-related targets
- Material climate-related risks and opportunities
- Greenhouse Gas Emissions, with Scope 1 and 2 from the first year of reporting, and Scope 3 from the second reporting year.
Help is available! I offer a training program to small or large organisations: Sustainability & ESG Reporting: The What, Who, Why & How. Please email firstname.lastname@example.org for more details.
*This information is general in nature and does not constitute legal or financial advice. Please obtain independent advice about your reporting obligations.