Implementation of mandatory climate reporting in Australia faces delay

On 27 March 2024, the Australian Government followed its promise to mandate climate reporting in Australia by introducing the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill (Bill) into Parliament. The Bill mandates climate reporting for entities required to prepare and lodge financial reports with the Australian Securities and Investments Commission (ASIC) under Chapter 2M of the Corporations Act 2001.

What is the start date?

The start date outlined in the Bill may vary depending on when the Bill passes through both Houses of Parliament. While the Government announced that the new climate reporting requirements will commence on 1 January 2025 rather than 1 July 2024, the Bill anticipates that the start date could be later. For example, if the necessary amendments proposed in the Bill:

1. Commence on or before 2 December 2024; the start date will be 1 January 2025
2. Commence between 3 December 2024 and 1 June 2025; the start date will be 1 July 2025
3. Commence on or after 2 June 2025; the start date will be the first 1 January or 1 July to occur 29 days or more after the day the amendments commence.

If the amendments don’t pass by June 2025, mandating climate reporting will fall to the next government, as a Federal election is due no later than May 2025.

What do these changes mean for your entity?

A six or twelve-month delay in the start date will not affect the timing of mandatory climate reporting for Group 2 and 3 entities. First-time reporting for Group 2 entities will be for financial years beginning on or after 1 July 2026 and for Group 3 entities, on or after 1 July 2027.

However, some Group 1 entities will receive extensions for mandatory reporting timeframes. Group 1 entities with a 30 June or 30 September year-end will get a one-year reprieve if the start date is delayed from 1 July 2024 to 1 January 2025, and all Group 1 entities will get a one-year reprieve if the start date is delayed by one year to 1 July 2025.

	Group 1	Group 1	Group 1	Group 2	Group 3
Start date	Per previous Exposure Draft - 1 July 2024	If 1 January 2025	If 1 July 2025	If 1 January 2025 or 1 July 2025	If 1 January 2025 or 1 July 2025
31 December year-end	31 December 2025	31 December 2025	31 December 2026	31 December 2027	31 December 2028
31 March year-end	31 March 2026	31 March 2026	31 March 2027	31 March 2028	31 March 2029
30 June year-end	30 June 2025	30 June 2026	30 June 2026	30 June 2027	30 June 2028
30 September year-end	30 September 2025	30 September 2026	30 September 2026	30 September 2027	30 September 2028

BDO is currently running an in-person and virtual masterclass for organisations affected by mandatory reporting. Whether your organisation is preparing to meet incoming mandatory reporting requirements or taking strategic steps on its sustainability journey, this masterclass has been designed to provide you with an understanding of carbon accounting and the practical knowledge to get started. Learn more and register for a masterclass near you.

Who must report?

The Bill does not change the types and sizes of entities required to prepare climate reports. The following table outlines the thresholds for reporting:

	Large entities and their controlled entities meet at least two of three criteria			National Greenhouse Energy Reporting (NGER) reporters	Asset owners
	Consolidated revenue	End of financial year consolidated gross assets	End of financial year employees
Group 1	$500 million or more	$1 billion or more	500 or more	Above NGER publication threshold	N/A
Group 2	$200 million or more	$500 million or more	250 or more	All other NGER reporters	$5 billion assets under management or more
Group 3	$50 million or more	$25 million or more	100 or more	N/A	N/A

Source: Mandatory climate-related financial disclosures - Policy position statement

Other matters

The Bill also contains various additions and amendments from the Exposure Draft, including:

• ASIC may give written notice to an entity if it considers a statement in the sustainability report incorrect, incomplete, or misleading. ASIC will have the power to direct the entity to ‘please explain’ and, if necessary, to correct, complete or amend the statement.
• For years commencing on or before 30 June 2030, the Auditing and Assurance Standards Board (AUASB) must make auditing standards under section 336 that specify the extent to which the sustainability report must be audited or reviewed (the Exposure Draft previously specified that only Scope 1 and Scope 2 emissions would be subject to review for this period).
• In addition to covering statements about Scope 3 emissions and scenario analysis for the first three years, the limited immunity provisions for directors have been expanded to include statements about the entity’s transition plans.
• The drop-dead 30 June 2027 end date for limited immunity provisions for directors proposed in the Exposure Draft is removed and now applies to financial years commencing during the first three years from the start date of the legislation.
• Further immunity is provided for ‘protected statements’ made during financial years commencing during the 12 months from the start date of the legislation for forward-looking climate statements. This includes immunity for protected statements made in the auditor’s report.

Do you need help with your climate reporting?

Our sustainability reporting team can help you understand what this might mean for your organisation, contact us today.