Mandatory Climate Risk Disclosure Central to Unlocking Billions in Clean Industry

12 December 2022

Key Points

  • The Australian Treasurer today opened consultation on mandatory climate disclosures.
  • A mandatory climate disclosure regime will;
    • Support efficient investment in companies and projects aligned with net zero emissions,
    • Help Australian companies stay attractive in global capital markets,
    • Help investors, regulators, and other stakeholders form a comprehensive, reliable understanding of the economy’s overall climate risks and opportunities,
    • Reduce the reporting burden for companies that need to disclose into multiple jurisdictions,
    • Help protect against greenwashing.
  • IGCC has formed a sub-group of our Policy Working Group to participate in the consultation process.

Media Statement

Standardised, mandatory climate risk disclosures, as presented for consultation today, will help investment towards net zero.

“Investors have been calling for globally consistent, standardised reporting on climate risks and opportunities, so we’re pleased the Treasurer’s announcement today is moving this forward” said Erwin Jackson, IGCC Director of Policy.

“The investable climate disclosures will help investors allocate capital to the projects and companies that are well placed to thrive in the transition to a decarbonised economy.

“High quality, standardised, and reliable climate disclosures will help Australian companies attract investment from global capital markets.

“Mandatory climate disclosures will help investors and regulators form an overall picture of the climate risks and opportunities – which we’re lacking today.

“Global standards streamline climate reporting for investors and businesses, cutting down duplication across jurisdictions.

“Mandated and auditable climate reporting protects investors and consumers against greenwashing in the same way that financial statements help protect against fraud.”

Background to Today’s Announcement

Many of Australia’s major trading partners have already announced their mandatory disclosure frameworks and sustainable finance policies.

Mainstream Australian investors have been supportive of mandatory standards-based disclosures, that would therefore include companies’ auditable data, scenarios, scope-3 emissions, and their transition plans.

Transition plans show how companies intend to evolve their existing assets, operations, and overall business models to align with a 2050 net-zero trajectory, and protect themselves against the direct and indirect physical risks associated with climate change, such as extreme weather events, damage to infrastructure, and system instability.

In June 2021, IGCC along with investor groups representing the majority of Australian and global AUM released a plan for mandatory disclosure requirements aligned to the Task Force for Climate Disclosure (TCFD) in Australia.

Investors view current draft disclosures as a minimum standard, with the International Sustainability Standards Board (ISSB) providing a path for advanced markets, such as Europe, Asia and North America, to expand beyond these baseline standards, while maintaining consistency.

IGCC’s Engagement With the Consultation Process

The policy working group has formed a subgroup to engage with the process and answer the questions in the discussion paper.

We expect to present investors’ perspectives on;

  • The timing for phasing-in disclosures,
  • What size and type of entity will be covered by the rules, and when,
    (ie: ASX100 vs ASX300, amount of revenue, listed and unlisted)
  • The stringency of requirements, including for scope 3 emissions and corporate transition plans

Members who would like to be involved or stay closely informed with IGCC’s work during the consultation process should contact Amy Quinton, Manager Policy.