Government looks to ‘empower the AASB to deliver sustainability standards’

The Australian Government has proposed to ‘empower the AASB to deliver sustainability standards’ and called for comments. We share BDO’s position on this approach.  

At BDO, we often provide comments locally to the Australian Accounting Standards Board (AASB) and internationally to the International Accounting Standards Board (IASB), among other areas. Recently, the Government has called for comments on its proposal to ‘empower the AASB to deliver sustainability standards’.

Document

Proposal

Comments due to Treasury by

Exposure draft - Treasury Laws Amendment (Measures for Consultation) Bill 2022: sustainability standards

To amend the ASIC Act to grant the AASB the ability to develop and formulate the sustainability disclosure standards necessary to support the Government’s climate-related commitments.

16 December 2022

As a global community, we’re adapting to the growing need to make changes to reduce our collective impacts on the environment. We are constantly breaking new ground in how we view and communicate the risks and opportunities considered under the sustainability umbrella.

Global standards are continually developing – with the likes of the recommendations published by the Taskforce for Climate-Related Financial Disclosures (TCFD) recently marking its fifth anniversary and the Taskforce for Nature-related Financial Disclosures (TNFD) gaining momentum after its publication in 2021. The release of new standards in development by the International Sustainability Standards Board (ISSB) is imminent, expected early in 2023.

However, Australian requirements for sustainability-related disclosures have been lacking. Following the recent passing of the Australian Government’s Climate Change Bill 2022, the Treasury has proposed an amendment to the Australian Securities and Investment Commission Act 2001 (ASIC Act) to grant the AASB the ability to develop local sustainability standards. This will guide users and preparers of financial information, as well as businesses, investors, and financial institutions, in assessing sustainability-related risks and opportunities.

BDO's position

We wholeheartedly support the AASB and its work in implementing and upholding stringent accounting standards in Australia. We recognise and appreciate the inputs the AASB has already contributed to the standards being developed by the ISSB.

In the short term, and in the interest of gaining immediate momentum for Australia in the sustainability space, we support the AASB taking the reins to begin this vital work.

In the medium to long term, we believe that Australia’s sustainability standards require specialised sustainability knowledge to lead the development of local standards and guidance. Globally, the International Accounting Standards Board (IASB) works closely with the ISSB to develop aligned standards. We believe that mirroring this approach to create an Australian sustainability board to work in conjunction with the AASB would best serve the needs of Australian organisations.

Providing clear guidance, and eventually requirements, for sustainability-related disclosures will support Australian organisations as we work together to achieve carbon neutrality.

Contact us

To understand more, please contact Aletta Boshoff, Partner, National Leader, ESG & Sustainability and National Leader, IFRS & Corporate Reporting.