Australian firms mandated to disclose climate impacts from 2025

The Australian government has passed a law mandating companies to publish ISSB-based sustainability disclosures, with the first reporting period starting in January 2025.

The bill, passed last week by both the House of Representatives and the Australian Senate, was inspired by the publication of the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2 standards for voluntary sustainability disclosures.

It will be phased in gradually, starting in 2025 with companies that emit more than 50,000 tonnes of CO2 equivalent per year, or that meet two of the following criteria: consolidated revenue of A$500 million or more, annual consolidated gross assets of A$1 billion or more, and/or 500 employees or more.

These are expected to produce their first climate-related disclosures for the financial year starting either in January or July 2025, according to the Australian Sustainability Reporting Standards (ASRS) – which are set to be finalised this month.

The latest draft ASRS, known as AASB S1 and AASB S2 are aligned internationally to IFRS S1 and IFRS S2, except they do not require the disclosure of industry-based metrics or a reference to SASB Standards. The law also protects executives from litigation around their Scope 3 emissions disclosures, as well as climate scenario analysis.

Climate-related financial disclosures in Australia: Phased implementation

After the first round of companies start publishing reports for the 2025 financial year, a second group will have to start reporting from July 2026: those meeting at least two criteria between A$200 million or more in revenue, A$500 million or more in gross assets and 250 or more employees.

Finally, companies with A$50 million in revenue, A$25 million in assets and/or at least 100 employees will be required to submit climate-related financial disclosures from July 2027. 

All companies will be asked to report their Scope 1 and 2 emissions – calculated according to the GHG Protocol methodology – but will have an extra year to report on Scope 3 emissions after their first year of reporting. 

Beyond that, mandatory content in the disclosures includes: the valuation and percentage of assets or activities vulnerable to transition risks and physical climate risks, the same metrics for activities aligned to climate-related opportunities, capital expenditure and investment deployed towards climate risks and opportunities, whether the company uses an internal carbon price (and its price in dollars per tonne of emissions), and the proportion of executive management remuneration linked to climate-related considerations.

More and more countries making ISSB-aligned climate disclosures mandatory

Australia is now the latest of more than 20 countries to turn the voluntary ISSB standards into mandatory climate disclosures for large entities – after China published a similar draft last May.

According to the IFRS Foundation, which is behind the ISSB standards, jurisdictions representing nearly 55% of global GDP, more than 40% of global market capitalisation and more than half of global greenhouse gas emissions are now on a pathway to adopt the sustainability disclosure standards issued by the ISSB for mandatory reporting.