This is part 12 of a series of educational posts from the IFoA’s Climate Change Disclosures Working Party about climate reporting topics. Here we focus on Australia: current practices and a brief overview of things to come.
Australia is one of the top 10 emitters per capita with its continued energy dependence on coal1. Further, Australia was one of the countries that did not support any new pledges at COP26 in Glasgow in 20212.
However, the new elected government in 2022 updated its Nationally Determined Contributions (NDCs), a country’s non-binding climate action plan as part of the Paris Agreement, with a new target of 43% reduction in greenhouse gas emissions3.
In 2019 the Australian Securities Index updated its Corporate Governance Principles and Recommendations, asking listed entities to consider disclosures in line with Task Force on Climate-related Financial Disclosures (TCFD)’s recommendations.
In November 2021 the Australian Prudential Regulation Authority published its Prudential Practice Guide: CPG 229 Climate Change Financial Risks – guidance aimed at banks, insurers, and pension funds4. The guide states that it is “better practice” for disclosures to be aligned with TCFD requirements5.
Australia is moving towards mandatory climate-related disclosure requirements.
In December 2022 the Australian Treasury published an initial consultation paper called Climate-related financial disclosure, followed up by a second consultation paper in June 2023, with the request for responses being 21 July 2023 for the latter.
The overall aim of the consultation to seek “views on… internationally-aligned requirements for the disclosure of climate-related financial risks and opportunities in Australia.” The current aim is to target entities that meet certain thresholds and who are in addition required to submit financial reports as part of the 2022 Corporations Act, with requirements coming into force for the financial year 2024 to 2025.
For an outline of the timelines covering both the consultation and the Australian Accounting Standards Board involvement in issuing new standards, see: Climate-related financial disclosure: Second consultation.
Please note that the above is correct as at the time of writing this publication (31 July 2023) and discussions most likely have subsequently progressed. Do visit the Australian Treasury website (link below) for updates.
Below is a list of websites we hope you find useful:
Australian Accounting Standards Boards
Australian Accounting Standards Boards: climate-related work
Climate-related financial disclosure: Second consultation - Australian Treasury (treasury.gov.au)
What are your thoughts on the points raised in this article?
We would love to hear your views in the comments on the IFoA's Sustainability Finance Community LinkedIn page.
To find out more, visit: Sustainability: research working parties
[3] Climate Action Tracker - Australia
[4] Australian regulator issues long-awaited climate risk guidance - P. Duran (reuters.com)
[5] Prudential Practice Guide: CPG 229 Climate Change Financial Risks - APRA (apra.gov.au)
The views expressed in this post are those of the individual authors, and not necessarily those of the Institute and Faculty of Actuaries or those of their employers. Information within this post is correct as at the date of writing (i.e. end of July 2023). Hence, there may be subsequent updates which are not reflected. Any reader should still reference the underlying legislation and standard, and should there be any conflict, the underlying information in the relevant standard or legislation supersedes any information presented in this post.