Australia publishes draft ESG reporting law

Posted on January 19, 2024 by Editor

Following a consultation last year, the Australian Government Treasury has introduced draft legislation mandating comprehensive climate-related reporting and assurance for large and medium-sized companies. The legislation is aligned with the International Sustainability Standards Board (ISSB) standards.

It marks a notable step forward in providing investors and companies with the clarity needed to navigate the transition to a net-zero future down under.

The legislation seeks to align these upcoming disclosures with with the ISSB standards, although it provides the Australian Accounting Standards Board with a power to prepare standards aligned with Australian conditions. The disclosures will cover greenhouse gas emissions, climate-related metrics, and related governance or risk management processes. The law takes a phased in approach for Scope 3 reporting, giving companies an extra year to prepare for this trickier element. The legislation also introduces assurance requirements for climate-related reporting, mirroring financial reporting standards,

While the immediate focus is on climate disclosure, there are promising signals that a broader, combined financial and climate digital mandate may be on the horizon. Despite the current absence of a digital-first approach in the legislation, there is momentum towards incorporating digital reporting in the financial and ESG reporting landscape in Australia.

XBRL International is encouraged by the existing stakeholder support for iXBRL reporting in this area – the use of digital reporting standards could significantly enhance the quality, accessibility, and comparability of climate-related disclosures.

The consultation period, open until February 9, is a key moment to shape the future landscape of ESG reporting in Australia.

See the exposure draft and find out how to comment here.

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