The way businesses approach climate change is becoming increasingly important, and new Climate-Related Financial Disclosures are being created to guide this. This process gained momentum in 2021 with the formation of a group called the International Sustainability Standards Board (ISSB).
The ISSB dedicated 18 months to consulting with different industries, aiming to formulate a comprehensive guideline that encourages companies to be more transparent about their sustainability efforts. In June, they introduced a set of guidelines called the IFRS Global Sustainability Standards, designed to instill confidence in the information companies share regarding their sustainable practices.
Following this, the government has drafted a paper that outlines expectations for large companies. These companies will be required to report on their plans, risks, and opportunities related to climate change. The reporting must align with international standards and show the companies’ readiness to achieve the objectives of the Climate Change Act 2022.
The implementation of these rules begins on July 1, 2024. Initially, they will apply to Australia’s biggest companies, as defined by their revenue, asset value, and employee count. However, by 2027, companies categorised as “Controlling Corporations” under NGERS may also have to comply, even if they don’t meet the initial criteria.
Companies will be mandated to disclose various information, including data on their emissions, plans to meet climate targets, and strategies to handle any climate-related risks. Non-compliance could lead to significant penalties.
While the government is soliciting feedback on these rules until July 21, 2023, it’s clear they’re set to become a permanent fixture. By the next financial year, many businesses will be required to adhere to these rules, and there will be no option to opt out. It’s crucial for businesses to start preparing now to be ready when the final version of the rules is officially enacted.
This is a summary article from Edge2020 – read the original article.