1 January 2025 - Start date for climate-related financial disclosure + Your 5 Step Strategy for Compliance
It’s official. The uncertainty is over.
On 9 September 2024, the Parliament of Australia passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.
From 1 January 2025, Australian corporations meeting certain thresholds will have new legal requirements to report on certain climate-change related matters.
All entities that are covered by the new legal requirements will need to put in place urgent data collection and governance processes to enable compliant reporting. Arguably as important, entities in the supply chain of reporting entities also need to understand the new laws and be ready to provide data.
Background
Climate-related financial disclosure refers to reporting about how climate change could affect a company’s financial performance, operations, and sustainability. Climate change could affect a company’s financial performance in many ways. For example, more frequent and severe weather events caused by climate change could damage a company’s assets and disrupt its operations. Assets or investments located in areas prone to natural disasters may also suffer devaluation.
On 27 March 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 was introduced to the Australian Parliament. Following passage through the Senate in August, the legislation sees the introduction of new requirements for certain entities In Australia (meeting particular thresholds) to disclose on certain climate-related matters. Impacted entities will need to prepare a new mandatory Sustainability Report alongside their financial statements. Financial accounts and Sustainability Reports need to be prepared in accordance with new Australian Accounting Standards and the standards contain much of the detail about what has to be reported under the new regime. The regime is predicted to impact around 20,000 Australian entities.
Our earlier Environment Express Blog Post on Climate-related Financial Disclosure Reform provides a more detailed overview of the changes.
Are you ready? (If the answer is no, you are not alone)
In industry forums throughout 2024, we have heard repeatedly that corporations are unclear on the action they should take in readiness for the changes. The overwhelming majority are at very early stage of planning for compliance and governance requirements. If this is your organisation, don’t panic.
Every entity is operationally different and has different risks and challenges.
Appointing independent suitably qualified advisers will be able to help you work through these challenges. Although it is contemplated that audit of the Sustainability Report will align with usual financial auditing processes (similar to NGER data auditing), there are several important preparatory matters where legal and consultancy support will help your organisation to manage risk.
5 Step Strategy for Compliance Action - Free Interactive PDF
Guthrie Legal in conjunction with the Climate Team at Senversa have developed a straightforward conceptual Strategy to assist you to understand the actions that will usually be needed to achieve legal compliance (depending on your work to date).
The image below provides an overview of the Strategy.
If you would like to grab a copy of this free Interactive PDF, please email admin@guthrie-legal.com. Each part of the strategy has click-open boxes to help you navigate actions, and information icons to provide more detail.
A 5-Step Strategy to help conceptualise management actions to meet compliance and governance requirements.
Legal support
If you are unsure of your next move, then please feel free to get in touch by email: gabrielle@guthrie-legal.com
Some areas where legal advice can be helpful are:
1) identifying which Group category your organisation will fall into and when reporting obligations will commence and advising on what Group category(its) your customers fall into and what information they will likely require from you (and when);
2) briefings to your board and senior teams on the proposed changes to ensure that officers are sufficiently aware of the changes and can exercise due diligence in relation to the changes;
3) understanding the legal requirements under the new scheme and assisting you to undertake a gap analysis of existing arrangements against forthcoming requirements to understand where there may be gaps in existing management and governance arrangements in order to take action to close those gaps;
4) reviewing management and governance policies and procedures to ensure legal compliance;
5) reviewing commercial contracts with your clients and your suppliers (i.e. your supply chain contracts) to understand what is currently required under those contracts (and when) in terms of data collection and provision.
The legal stuff
This article is aimed to be high-level, practical and thought-provoking. It is not a detailed description of environmental law in Australia. You should always seek independent legal or other professional advice on specific cases and before acting or relying on any of the content. All of the information in this article and on this website and any downloads are intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice or establish a lawyer - client relationship. Whilst attempts have been made to ensure that the content is current, Gabrielle Guthrie and Guthrie Legal do not guarantee its currency. Copyright 2024
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