The government of Australia has started working on a consultation paper for developing a set of climate risk disclosure and reporting rules for companies in the private sector. Using a gradual process, the rules would become mandatory in 2024.
The initiative follows similar rules being unrolled in the US, UK and European Union in a bid to better measure and reduce greenhouse gas emissions. Investors across the globe have been applying pressure for a formal set of rules for reporting, especially after the disintegration of ESG efforts and their lack of transparency.
Australia’s Climate Change and Energy Chris Bowen and Minister for Financial Services Stephen Jones came out with a joint statement after the announcement saying: “As more countries move towards global best practice, and as investors demand higher-quality disclosures, it’s important that Australia now establish a framework for consistent, credible, internationally-comparable disclosures.”
The main points at this stage for the climate reporting consultation in Australia will be aligning with international practices, as well as feedback on how exactly to apply reporting standards when it comes to the hard to identify Scope 3 emissions, those coming from the supply chain of a company and not easily tackled. An important distinction here is made for financial institutions – emissions that are in essence financed by them would also be considered Scope 3 and they would be responsible for reducing them.