The Australian Treasury has launched a consultation to gather feedback on proposed rules regarding climate-related financial disclosure, aiming to align with recommendations from the International Sustainability Standards Board (ISSB). The consultation, open for responses until February 17, 2023, seeks initial views on key considerations for standardized, internationally aligned requirements for disclosing climate-related financial risks and opportunities in Australia.
The consultation also invites opinions on related matters, including necessary changes to ensure financial reporting bodies can keep pace with international standard-setting priorities on climate and sustainability reporting.
Outlined in the consultation are six principles to guide the climate-related financial disclosure reforms:
- Support for Australia’s climate goals.
- Enhancement of the quantity, quality, and comparability of disclosures.
- Clear understanding of obligations by all parties.
- Alignment with international reporting standards to the extent possible.
- Building upon existing financial reporting systems with scalability and flexibility.
- Proportional disclosure requirements relative to addressed risks.
Simon O’Connor, CEO of the Responsible Investment Association Australasia, expressed support for the government’s national sustainable finance agenda, aligning Australia with other countries like the UK in facilitating the finance sector’s contribution to national prosperity.
Australia joins several jurisdictions, including New Zealand, Japan, the European Union, and the UK, in establishing mandatory climate-related reporting. The US, Switzerland, and Singapore are also developing compulsory disclosure requirements. However, achieving global unified standards proves challenging, with different jurisdictions adopting varying approaches.
Australia’s decision to align with ISSB recommendations differs from some jurisdictions, like New Zealand and the UK, which follow the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. The ISSB approach aims to standardize and enhance comparability between climate disclosures globally, contrasting with the TCFD’s allowance for variability in reporting across entities.
The coexistence of different standards across jurisdictions presents an ongoing challenge for multinational companies.