Coalition, Greens threaten Anthony Albanese’s mandatory climate risk reporting scheme

A key plank of Labor’s climate policy is in doubt, with the opposition warning a scheme forcing companies to disclose climate risks could cost businesses up to $2.3bn annually.

The Coalition says the compliance cost of the Albanese government’s climate risk reporting scheme is higher than regimes in the US, New Zealand and UK. Picture: Glenn Campbell

The Coalition and the Greens are threatening to scuttle a key plank of Labor’s climate policy in the Senate, with the opposition warning a scheme forcing companies to disclose climate risks could cost businesses up to $2.3bn annually.

The Greens - who say corporate climate reporting is “long overdue” - are refusing to support the Albanese government’s mandatory climate disclosure regime unless Labor scraps a separate bill to simplify offshore oil and gas approvals processes.

Pushing back against the proposed climate reporting requirements, which has been described as “the biggest change to company reporting in a generation”, the Coalition has used a parliamentary report to outline its demands to limit the policy’s impact on business after farmers cautioned it could be an “absolute disaster” for them.

“Given the scope of this reform, the significant annual compliance cost, and significant variation from international standards, a more thorough evaluation of this legislation is essential to ensure Australia retains its economic competitiveness and that the regime - which will be subject to enforcement and litigation – is practical, feasible and does not leave small businesses or consumers behind,” Coalition senators Andrew Bragg and Dean Smith say in the Senate Economics Legislation Committee report.

“Spread across the 1800 entities Treasury estimate will be captured at a minimum, that compliance cost could reach a potential annual cost of $2.3bn to the economy.”

Under the mandatory disclosure rules, large companies and asset managers would be required to reveal climate-related risks, risk-management strategies and emissions targets to investors in a bid to increase transparency and reduce “greenwashing” – false or misleading environmental and sustainability claims.

Companies with $500m in revenue would have to report climate matters to investors from July 1, though this is likely to be delayed by at least six months.

Smaller companies with a turnover of $200m would start in 2026, and those with $50m and 100 or more employees in 2027.

The Coalition wants the government to continue consulting on the reforms to hear from small businesses about the impacts on their supply chains.

The opposition also says companies with a turnover of $50m or more should be excluded from the mandatory disclosure obligations and liability protections - ensuring companies can’t be litigated against as the scheme is rolled out - should be extended.

Opposition treasury spokesman Angus Taylor said the scheme as drafted had “world leading compliance costs” and would have a particularly onerous impact for small and medium businesses already drowning in red and green tape.

“The last thing the business sector needs at this time, with rising energy costs, bad workplace laws and Labor’s homegrown inflation, is more red and green tape that kills productivity,” Mr Taylor said.

“In order to have a low inflation, strong growth economy, the government must get out of the way and allow businesses to take risks and innovate.”

But the Greens and ACT independent senator David Pocock say Labor must go harder in requiring companies to test and disclose how their activities hold up under more extreme weather impacts of at least 2.5C-3C in global warming, not just the 1.5C warming scenario proposed by the government.

They also want fewer liability protections for companies, with Senator Pocock saying as it stands “the regime enables corporate greenwashing”.

“Labor is trying to greenwash its climate credentials while pushing a law through parliament to allow massive gas projects to bypass environment laws,” Greens economic justice spokesman Nick McKim said.

“While Labor keeps pushing environmental exemptions for the gas cartel the Greens aren’t in any mood to facilitate its legislative agenda.”

Jim Chalmers, who has said the changes would give investors the clarity and certainty they need to invest, was approached for comment.

The Australian revealed earlier this year there are concerns farmers – who supply the big supermarkets and other large companies that will have to make climate disclosures under the program – will be affected by scope 3 reporting requirements.

Scope 3 includes emissions along the supply chain, which are not generated directly by a company within its fence line or through its electricity consumption.