Business have backed new climate risk disclosure regime

An alliance of 15 business and investor organisations has backed Labor’s changes aimed at bringing climate risk disclosure requirements into line with international standards.

Opposition Leader Peter Dutton has come under pressure over the timing of his nuclear energy policy announcement. Picture: Lisa Maree Williams/Getty Images

A high powered alliance of 15 leading investment and business groups, representing more than 900 companies with more than $80 trillion in assets under management, has backed changes to bring climate risk disclosure requirements into alignment with international standards.

The intervention from the group – which includes the Investor Group on Climate Change (IGCC), Australian Council of Superannuation Investors (ACSI), Australian Institute of Company Directors (AICD), Business Council of Australia (BCA), Financial Services Council (FSC) and Insurance Council of Australia (ICA) – comes ahead of a Senate committee hearing into the new climate disclosure regime on Tuesday.

The contribution comes as Peter Dutton came under pressure on Sunday over the timing of his nuclear energy policy announcement after previously flagging it would be released ahead of the May 14 budget following the Dunkley by-election.

The Opposition Leader told the ABC’s Insiders program the energy policy would be unveiled when it was “ready to go” and at the “most opportune time.” He also suggested that some Coalition announcements had been delayed as a result of the two stabbing attacks which had occurred in Bondi and Wakeley.

“Obviously the events of last week, for example, meant that part of our program couldn’t be rolled out. That’s not unreasonable, as you would expect,” he said.

The Albanese government currently has legislation before the parliament aimed at introducing standardised mandatory reporting requirements for businesses to ensure they are making high quality climate-related financial disclosures, with Jim Chalmers arguing the changes will help people make “more informed investment decisions.”

However, the shake-up has also ignited concern in the regions with the National Farmers Federation warning the shake-up could be an “absolute disaster.” The NFF has argued for agriculture to be exempt from reporting on indirect greenhouse gas emissions, while Opposition treasury spokesman Angus Taylor has raised the prospect of a “substantial increase” in the regulatory burden on business.

A new alliance of business and investor organisations has now backed the government’s bill for striking a “sensible and pragmatic balance” and says it will provide “critical certainty for business and professionals regarding the timing and requirements of mandatory climate-related disclosures.”

“It is critical to business certainty and continued Australian competitiveness for the Bill to be passed in a timely manner. We urge passage without undue delay,” the groups said.

Treasurer Jim Chalmers. Picture: NCA NewsWire/Nikki Short

Shadow Treasurer Angus Taylor. Picture: NCA NewsWire/Martin Ollman

The alliance – which also includes the Property Council of Australia (PCA), Australian Shareholders’ Association (ASA), Australian Sustainable Finance Institute (ASFI), Australasian Investor Relations Association (AIRA), Governance Institute of Australia (GIA) and Institute of Public Accountants (IPA) – cautioned that the move towards embracing standards set by the International Sustainability Standards Board (ISSB) would “not be easy.”

It acknowledged the shake-up represented a “once-in-a-generation change to corporate reporting, which will require significant investment and upskilling across the Australian market.”

“It will also take time, as organisations mature their disclosure practices. We also recognise the need to manage the impact on smaller entities by carefully calibrating requirements,” the alliance said.

Under the government’s legislation, the new disclosure requirements will be phased in and the largest companies will be required to submit sustainability reports for their financial years commencing from January 1, 2025.

The starting dates for smaller companies will be delayed – those with a turnover of more than $200m will have their obligations commence from January 2026 and from January 2027 for those with a turnover of more than $50m.

In its submission to the economics legislation committee, the ASX expressed concern about the January 1 start date and the “ambitious time frame for implementation.”

“Rushed implementation would not only negatively impact reporting entities, investors and efficient capital allocation, but may undermine the credibility of the regime and jeopardise Australia’s attractiveness as an investment destination for global capital,” it said.