On Monday, the Albanese government announced that it has begun consulting on the development of a new Australian climate risk disclosure framework.
Treasurer Jim Chalmers, Assistant Treasurer Stephen Jones, and Minister for Climate Change and Energy Chris Bowen said in a joint statement, that Australia would establish a framework for “consistent, credible, internationally comparable disclosures” amid rising investor demand for higher-quality reporting requirements.
“This internationally aligned framework will provide business and investors with the clarity and certainty they need to manage climate risks and invest in new opportunities,” they said.
“It will ensure large business and financial institutions are providing more information and greater transparency on how they are responding to climate change and supporting the transition to net zero.”
The reporting requirements are expected to be mandatory for large entities and will be phased in over time. The government also intends to apply appropriately tailored requirements to comparable Commonwealth public sector corporate entities and investment funds.
“The government will consult closely with industry, financial regulators and other stakeholders to develop an approach that is fit for purpose and ensures Australia is well positioned in global markets,” Mr Chalmers, Mr Jones and Mr Bowen added.
Responding to the announcement on Monday, acting Financial Services Council (FSC) CEO Spiro Premetis said that the government’s move marked an “important initial step”.
“Having consistent and globally interoperable reporting of climate risk across Australian companies is vital in ensuring that investment decisions can be made in the best long-term financial interest of Australians,” he said.
“The investment community sees climate change as a financial risk to their investment portfolios and a risk to the savings of millions of Australians.”
Mr Premetis noted that the FSC looks forward to continuing to work with the government on the development of the reporting regime as well as its new sustainable finance strategy.
“Combatting greenwashing and reaching greater data-driven consensus on what constitutes sustainable investment will lead to more efficient capital flows in Australia,” he said.
Work begins on sustainable finance strategy
As part of Monday’s announcement, the Ministers said that Treasury has been tasked with developing a comprehensive, sustainable finance strategy that encompasses a range of measures to improve transparency, deepen Australia’s green finance markets and seize opportunities presented by surging global momentum in sustainable finance.
As part of this, the government has also written to the Council of Financial Regulators, which includes the heads of APRA, ASIC, the Reserve Bank and the Treasury Secretary, to ask for their support for its broader agenda.
“The strategy will be developed in close coordination with these financial regulators, other Commonwealth departments and industry, and will be considered by government in early 2023 before a period of public consultation on key measures,” the Ministers said.
“The strategy will include the development of new standards or taxonomies for sustainable investment, further initiatives to reduce greenwashing and strengthen ESG labelling, and more ambitious participation in global forums to support climate and sustainable finance frameworks and investment, especially here in our part of the world.”
