A senior NAB banker has joined the corporate regulator in urging businesses to use existing climate frameworks and data to comply with the imminent introduction of mandatory climate disclosure.
NAB Executive, Corporate Finance, Connie Sokaris, who sits on the board of the Australian Sustainable Finance Institute, advised companies to build on their existing climate reporting, as well as secure specialist support, to prepare for the new regime.
“Ultimately having a credible, internationally aligned, mandatory climate disclosure regime will help to improve transparency and comparability and therefore enhance the management of climate risks across Australia,” Ms Sokaris said.
“It helps the finance sector understand customers’ climate-related risks and their strategy for addressing them.
“This enables the identification of opportunities to continue to support greater capital allocation towards emissions reduction and adaptation goals.”
Long-awaited legislation to introduce mandatory climate reporting against standards prepared by the International Sustainability Standards Board was passed by federal parliament last month.
In the next few years, more than 6,000 entities will be required to report under the standards, in what Australian Securities & Investments Commission (ASIC) chair Joe Longo has previously said was part of the biggest change to financial reporting and disclosure standards in a generation.
Implementation will be phased according to a company’s size or level of emissions.
Corporates meeting at least two of three criteria – revenue of more than $500m, assets of more than $1bn or more than 500 employees – will have their first annual reporting period under the new regime starting from January 1, 2025.
Companies with two or more of three smaller benchmarks – a minimum of $200m in revenue, $500m in assets or 250 employees – will report under the new regime for the first time starting from July 1, 2026.
The last group of companies will report from July 1, 2027 if they have at least two of the following – a minimum of $50m in revenue, $25m in assets or 100 workers.
Last month, Mr Longo urged companies to start engaging early with the new framework on mandatory climate reporting by considering the extent to which it can be integrated into existing risk and compliance systems.
ASIC, he said, would take a “proportionate and pragmatic” approach to supervision and enforcement of the new regime as business adjusted to its phased implementation.
“In this regard, entities may wish to consider utilising existing processes and procedures that have likely been refined over many years to prepare and verify financial reporting disclosures,” Mr Longo said in a speech to the Australian Compliance Institute’s annual conference.
“This applies to all entities that will eventually be captured by this regime – start engaging with these new obligations early so you can be prepared when the time does come for you to lodge your first report.”
Law firm Allens said the introduction of the regime marked Australia as one of the early movers in imposing rigorous requirements on reporting entities aligned with the International Financial Reporting Standards.
Locally, as well, the legislation applied to listed and unlisted entities, while other jurisdictions such as the European Union and Japan only focused on listed groups.
