In June 2023, Treasury released a second consultation paper seeking views on the Government’s proposed requirements for disclosure of climate-related financial risks and opportunities in Australia and the implementation timeline.
Every organisation is likely to be impacted by climate change and the move to a decarbonised economy either because of statutory obligations or commercial relevance. This consultation is designed to bring to Australia mandatory disclosures for climate-related financial risks and opportunities, which are already developing at a fast pace overseas.
Pitcher Partners are fully supportive of the need to respond appropriately to climate change which we recognise as presenting material risks to the global financial system – risks which need to be managed by the capital markets, regulators and corporations. We acknowledge that climate change risks include physical risks of climate change and the transition risks associated with policy as well as the regulatory and technological changes which will be necessary as part of our efforts to mitigate climate change.
The second Treasury consultation has confirmed the Government’s plan to implement international sustainability standards, released in July 2023 by the International Sustainability Standards Board, such that they are mandatory for Australian large, listed companies and financial institutions starting in the 2024-25 financial year.
In our response to Treasury, we support the Government’s commitment to applying standardised climate-related financial disclosure requirements to large businesses to meet the growing demand for disclosure by investors. However, we draw attention to the practical challenges which will eventuate from the proposed timeline, such as:
- The availability of resources to undertake the necessary work both for businesses and professional services entities
- The cost implications to business of the changes
- The varying levels of assurance being proposed over the disclosures
- The aggressive timeline and the likely consequential commercial necessities which will lead businesses not directly required to report for statutory purposes being impacted sooner than the statutory obligation.
