Australia’s Mandatory Climate-Related Financial Disclosure Regime: What You Need to Know

On August 22, 2024, the Australian Senate passed significant legislation that will shape the future of corporate sustainability reporting. The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill mandates the implementation of Australia’s mandatory climate-related financial disclosure regime, which will take effect for financial years starting on or after January 1, 2025.

This new policy is designed to provide investors with standardised climate information from large Australian companies, enabling them to better manage climate-related risks. Publicly traded companies and large private firms will be required to disclose their climate risks, opportunities, Scope 1, 2, and 3 emissions, as well as their mitigation plans. Reporting will align with the Australian Accounting Standards Board (AASB) sustainability standards, consistent with International Sustainability Standards Board (ISSB) guidelines, with the final standards expected by Q4 2024.

Who Is Required to Report and When Does It Apply?

Entities reporting under Chapter 2M of the Corporations Act, including listed and unlisted companies, financial institutions, registrable superannuation entities, and registered investment schemes, must prepare a sustainability report if they meet any of the following criteria for a financial year:

  • Meet two of the three size criteria: consolidated revenue, consolidated gross assets, and consolidated number of full-time equivalent (FTE) employees.
  • Are registered under the National Greenhouse and Energy Reporting (NGER) Act.
  • Are an asset owner (e.g., registrable superannuation entities, registered schemes, or retail corporate Collective Investment Vehicles (CCIVs)), with total assets equal to or greater than $5 billion at the end of the financial year.

The phased implementation timeline is as follows:

  • From January, 2025: Large companies (500+ employees, $500M+ revenue, $1B+ assets) and asset owners with $5B+ in assets.
  • From January, 2026: Medium-sized companies (250+ employees, $200M+ revenue, $500M+ assets).
  • From January, 2027: Small companies (100+ employees, $50M+ revenue, $25M+ assets).

How Can Misio Help?

At Misio, we believe that transparency in sustainability reporting is not just a regulatory requirement but a powerful tool for building trust and long-term value. Our AI-powered platform empowers companies to understand commercial & reputation risks when communicating their sustainability initiatives effectively. Misio helps organisations ensure the credibility of their climate-related disclosures, strengthen stakeholder relationships, and enhance brand reputation.

What actionable steps can your organisation take?

  1. Engage with Stakeholders Early: Begin conversations with key stakeholders, including investors, customers, and employees, to understand their expectations and concerns regarding your company’s climate-related risks and opportunities.
  2. Develop Comprehensive Climate Mitigation Plans: Create detailed plans that address climate risks and outline actionable strategies for reducing your company’s carbon footprint across Scope 1, 2, and 3 emissions.
  3. Integrate ESG Reporting and  into Your Business Strategy: Ensure that Environmental and Social considerations are embedded into your overall business strategy, not just treated as a compliance exercise. This will enable your organisation to make more informed decisions that align with long-term sustainability goals.
  4. Ensure ESG and Sustainability Claims are Validated Prior to Stakeholder Communications: As your company grows, ensure that your sustainability communications meet the needs of Customer, Teams, Investors & Regulators.

By taking these proactive steps, companies can not only comply with the upcoming mandatory climate-related financial disclosure regime but also position themselves as leaders in sustainability, driving positive change for people and the planet.

Useful references:
ASIC: https://asic.gov.au/about-asic/news-centre/speeches/start-preparing-now-early-asic-guidance-on-the-mandatory-climate-disclosure-regime/
ISSB & IFRS: https://www.ifrs.org/groups/international-sustainability-standards-board/