On August 22, 2024, the Senate passed legislation to implement Australia's mandatory climate-related financial disclosure regime, effective for financial years beginning on or after January 1, 2025.
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill will provide investors with standardized climate information from large Australian companies, helping them manage climate risks.
The policy mandates publicly traded companies and large private firms to disclose climate risks, opportunities, Scope 1, 2, and 3 emissions, and mitigation plans. Reporting will align with AASB sustainability standards, consistent with ISSB guidelines, with final standards expected in Q4 2024.
Who is required to report and when does it apply?
Entities reporting under Chapter 2M of the Corporations Act, including listed and unlisted companies, financial institutions, registrable superannuation entities, and registered investment schemes, must prepare a sustainability report if they meet any of the following criteria for a financial year:
Two of the three size criteria (consolidated revenue, consolidated gross assets, and consolidated number of FTE employees).
Are registered under the NGER Act.
Are an asset owner (e.g., registrable superannuation entities, registered schemes, or retail corporate Collective Investment Vehicles (CCIVs)) with assets equal to or greater than $5 billion at the end of the financial year.
From January 1, 2025 – Large companies (500+ employees, $500M+ revenue, $1B+ assets) and asset owners with $5B+in assets
From January 1, 2026 – Medium-sized companies (250+ employees, $200M+ revenue, $500M+ assets)
From January 1, 2027 - Small companies (100+ employees, $50M+revenue, $25M+ assets)
How does this impact SMEs?
As highlighted in our earlier news alert in 2024, ‘How Will 2024 Mandatory Disclosures Impact Supply Chains and SMEs?’, the flow-on effect of the mandatory directive on Scope 3 emissions disclosure places immediate pressure on businesses, including SMEs, to monitor and report key emissions data to customers. This obligation spans various aspects of Australian business operations, involving infrastructure projects, export markets, local supply chains, multi-tiered government contracts, and access to finance.
How can we help?
As an Australian software company focused on ESG/Sustainability, we offer tailored solutions for SMEs and micro businesses to meet evolving mandatory reporting requirements, provide essential sustainability data to customers, gain a competitive edge in tenders and contracts, and enhance access to capital and investment.
For support in navigating ESG and sustainability demands, from risk assessment to seizing commercial opportunities, please contact us today.
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