Mandatory Sustainability Reporting

After many years of discussions and reviews, the Australian government is finally moving to implement an official, mandatory climate-related reporting scheme. In January 2024, the government released draft legislation which is intended to take effect from 1st July 2024. The relevant documents can be found at:
 
https://treasury.gov.au/consultation/c2024-466491

The draft legislation outlines the expected reporting requirements and is split into three entity categories as per graphic below. The proposed reporting requirements will be roughly similar for all entities which eventually fit into one of the reporting groups. The reporting requirements will be effected by changes to the Corporations Act, and the actual reporting will become part of the annual financial reporting requirements as per the Corporations Act.

The reporting requirements are relatively light and there are a number of exemptions and limitations available. The primary point of interest for most organisations is the inclusion of Scope 3 emissions. These emissions are not reported as part of the existing NGER scheme, and very few organisation currently measure and report Scope 3 emisisons.

These emisisons are very significantly more complex to calculate than Scope 1 and 2 emissions. This fact is reflected by the inclusion of a 3 year liability limitation, during which time, reporting entities will be exempt from any action by 3rd parties as a result of published Scope 3 emissions.

As a very rough guide, Group 1 will include around 500 reporting entities, Group 2 will include a further 2,000 entities and Group 3 around 5,000 entities, but most of these Group 3 entities will be able to claim the materiality exemption and therefore avoid mandatory reporting.