Australia Passes Landmark Climate Disclosure Bill, Advancing Sustainable Finance Strategy

The Australian Senate recently passed a groundbreaking bill mandating climate-related financial disclosures for large and medium-sized companies. This legislation marks a significant milestone in Australia's journey towards establishing a comprehensive climate risk disclosure framework.

Australian Treasurer Jim Chalmers celebrated the bill's passage, stating, "These critical reforms provide investors and companies the clarity and certainty they need to support the net zero transformation and further strengthen Australia's reputation as an attractive destination for international capital."

The new law, which was introduced earlier this year, aligns closely with the standards recently released by the International Sustainability Standards Board (ISSB) of the IFRS Foundation. It requires companies to disclose information on climate-related risks and opportunities, as well as greenhouse gas emissions across their value chains.

This legislation represents the first step in the Albanese government's broader sustainable finance strategy, as outlined in the Sustainable Finance Roadmap released in June. The strategy aims to reform financial markets to mobilize private capital for the transition to a net-zero economy. Additional priorities include establishing a sustainable finance taxonomy and instituting a labeling regime for sustainable investments.

The law will be implemented in phases, affecting companies based on their size:

1. From the start of 2025: Public companies and large proprietary companies with over 500 employees, revenues exceeding $500 million, or assets over $1 billion. This group also includes asset owners with more than $5 billion in assets.
2. Two years later: Medium-sized companies (250+ employees, $200 million+ revenue, $500 million+ assets).
3. One year after that: Smaller companies (100+ employees, $50 million+ revenue, $25 million+ assets).

To support this initiative, the Australian Accounting Standards Board (AASB) is developing internationally-aligned climate disclosure standards for Australian companies, expected to be issued soon. Additionally, the Australian Auditing and Assurance Board (AUASB) is working on assurance standards for climate disclosures, slated for late 2024.

This legislation positions Australia as a leader in mandatory climate-related disclosures, potentially influencing investment decisions and corporate strategies in the coming years. It also demonstrates Australia's commitment to addressing climate change and promoting sustainable business practices.

As companies prepare to meet these new reporting requirements, stakeholders across the business and environmental sectors will be watching closely to see how effectively this new framework drives transparency and supports Australia's transition to a low-carbon economy."

This revised article now incorporates the specific details you provided, including the Treasurer's statement, the phased implementation timeline, and the broader context of Australia's sustainable finance strategy.

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