Our resource centre provides an overview of the Australian regulatory landscape highlighting the increasing focus of climate change and sustainability within financial reporting and helps you consider the reporting impacts. Discover the latest developments in sustainability reporting both globally and locally.
Climate risk impact assessment
Use our 10 questions for audit committees as a starting point for your impact assessment relating to the financial statements.
1. Has your company made a net-zero commitment?
2. Does your company have polluting assets?
3. Is your company exposed to carbon-related regulation?
4. What about your inventory and production costs?
5. Does your company take part in an emissions scheme?
6. Does your company borrow funds?
7. Is your company a provider of finance?
8. What about your staff benefits?
9. What about your cash flow forecasts?
10. What about your disclosures?
Climate change reporting insights
An overview of the Australian regulatory landscape and financial reporting trends for climate change and decarbonisation.
Our publications help organisations communicate the impact of climate in Annual reports and financial statements.
We highlight Treasury’s positions for mandatory climate-related financial disclosures in Australia set out in its second consultation paper.
Second Treasury consultation paper on proposals for climate-related financial disclosures.
Climate reporting and related publications
- 23RU-07 Accounting for the Safeguard Mechanism
- 23RU-01 Sustainability-related disclosures in Australia
- Climate-related financial disclosure: KPMG submission – 2023
- Sustainability Reporting Survey – 2022
- ASX200 corporate reporting trends – 2022
- Bank’s climate-related disclosures – 2022
- Sustainability linked financing – accounting considerations (22RU-10)
- Sustainable energy: Power purchase arrangements (22RU-08)
- Climate change in the annual report – Webinar (October 2021)
- Climate disclosures within the Annual Report: Australian focus
- Towards Net Zero: International and Australian climate risk reporting
Climate change reporting FAQs
Frequently asked questions to help identify and address climate change impacts on your financial statements.
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Capital & Finance
- How do you account for different forms of government assistance?
- Do green bonds contain embedded derivatives?
- Do you have a lease of green technology?
- What are the potential impacts of leasing polluting assets?
Sustainability reporting developments
Understand the rapid and converging developments in sustainability reporting.
First sustainability reporting standards published in June 2023.
First sustainability reporting standards published in June 2023.
International Sustainability Standards Board
The IFRS Foundation is aiming to put sustainability reporting on the same footing as financial reporting through the establishment of a sister body to the International Accounting Standards Board. The International Sustainability Standards Board (ISSB) will develop baseline sustainability disclosure standards to enable globally consistent, comparable and reliable sustainability reporting using a building blocks approach. This approach will allow national and regional jurisdictions to build on that global baseline to set supplemental standards that serve their specific jurisdictional needs. Read more >
Global sustainability reporting standards
Sustainability reporting continues to develop at a fast pace across the globe. Three different bodies are developing sustainability standards across the globe: the ISSB, the US Securities Exchange Commission (SEC) and the European Financial Reporting Advisory Group (EFRAG).
The ISSB published the first two IFRS® Sustainability Disclosure Standards (IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures) on 26 June 2023. The IFRS Sustainability Disclosure Standards are designed to meet the needs of all organisations, not just the most sophisticated. They provide a clear idea of what organisations need to report to meet the needs of global capital markets – providing investors with globally comparable information.
The EFRAG and SEC standard proposals share numerous commonalities with the ISSB standards, however there are a differences that are important to understand when organisations are required to, or are considering reporting under multiple frameworks.
Our Comparing sustainability reporting proposals guide provides further insight on some of the practical challenges you may encounter as you prepare for the new sustainability reporting standards.
Sustainability-related disclosures – heightened expectations for current reporting periods
Recent regulator and government activities in Australia in late 2022/early 2023 reinforced the increasing focus and heightened expectations surrounding sustainability reporting, particularly climate. Exposed organisations need to act now rather than later in considering their reporting and communications.
In the absence of requirements mandating climate-related disclosures in Australia, the TCFD recommendations continue to be supported by all Australian standard-setters and regulators and are currently considered to be the basis for best practice disclosures in Annual Reports.
Mandatory climate related-financial reporting in Australia moving closer
In July 2023, the Australian Treasury released its second consultation paper to seek views on whether its proposed positions relating to coverage, content, framework and liability for climate related financial reporting are workable. Treasury is proposing to facilitate standardised mandatory reporting that aligns with international standards from financial years 2024-25.
The second Treasury consultation paper seeks feedback on proposed positions for:
- Reporting entities – phased implementation depending on size
- Assurance requirements – phased moving from limited to reasonable assurance
- Reporting framework – location, frequency, and timing of disclosures
- Liability and enforcement – modified liability approach to forward looking statements
- Reporting content - which is broadly consistent with IFRS S1 and IFRS S2.
This second consultation builds on its discovery consultation in December 2022 that sought initial views on proposals to introduce standardised, internationally aligned legislative requirements for disclosure of climate-related financial risks and opportunities in Australia.
Views were also sought on necessary changes to ensure Australia’s financial reporting bodies were appropriately positioned for the expansion of international standard setting priorities on climate and sustainability reporting.
The Australian Accounting Standards Board (AASB) will continue its climate-related financial disclosure project to release a standard based on IFRS S2. In its June meeting, the AASB decided to expand the scope of its project, previously limited to the for-profit sector, to explore the development of sector-neutral Australian climate-related financial disclosure requirements.
How KPMG can help
KPMG Australia's services related to sustainability and climate change reporting in financial statements.
Providing assurance over your climate change related disclosures throughout your Annual Report
Meet the team
Get in touch below.