Reporting Update 24RU-10
In early September 2024, the climate-related financial disclosures legislation: Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 was passed.
The Act is largely consistent with the Bill introduced to Parliament in March 2024. The main change is the requirement for entities to disclose information derived from scenario analysis using at least both of the following scenarios:
- 1.5C – the increase in the global average temperature mentioned in the Climate Change Act 2022 (a low global warming scenario)
- 2.5C or higher – the increase in the global average temperature that well exceeds the increase mentioned in the Climate Change Act 2022 (a high global warming scenario).
Mandatory reporting is for financial years beginning on or after 1 January 2025 (or later).
This means:
- 31 December 2025 year ends will report first, and
- first mandatory reporting date for 30 June year ends will be 30 June 2026.
The timing of first reporting by in-scope entities is based on size or level of emissions.
Key requirements
The Act is the culmination of a series of consultations and proposed amendments to the Corporations Act 2001 and the Australian Securities and Investment Commission Act 2001 covering the following:
- Reporting entities: those with Corporations Act Chapter 2M reporting obligations meeting prescribed thresholds.
- Phasing: timing of first reporting based on size or level of emissions.
- Reporting content: as required by Australian Sustainability Reporting Standards (ASRS), which includes Scope 3 emissions (with a first-year transition exemption proposed in the [draft] ASRS).
- Reporting framework: within a sustainability report in the annual report and lodged in accordance with current annual reporting requirements.
- Assurance requirements: phased approach ending with reasonable assurance of all climate-related financial disclosures made from years beginning 1 July 2030.
- Liability framework: modified liability approach for both directors and auditors to disclosures of Scope 3 emissions, scenario analysis, transition plans and climate-related forward-looking statements.
Both the AASB and AUASB continue their respective work on developing final sustainability reporting standards and phased audit requirements/timelines.
Further details are set out in this Reporting Update.
This is a significant milestone for mandatory climate-related financial disclosure reporting. It provides certainty for all stakeholders on the timing and legislative requirements. The ASRS will be finalised shortly, and we support the AUASB in its remaining consultation to finalise the assurance roadmap.
Next steps
- Get familiar with the legislation.
- Understand how the legislation applies to you.
- Follow the progress of finalisation of the ASRS expected in September now that the legislation is final.
- Start planning – perform a gap analysis and create a roadmap to identify capacity constraints.
- Reach out to your KPMG contact during your planning process.
- Be alert for guidance and relief issued by ASIC, the regulator responsible for this new legislation.
