Mandatory Climate Reporting: A New Era for Australian Businesses
The Australian Government is stepping up its commitment to sustainability by implementing mandatory climate reporting for a wide range of businesses. This initiative will be rolled out in phases, with the goal of full implementation by 2027. Here’s what you need to know to prepare your business for this significant change.
Who Will Be Affected?
The mandatory climate reporting requirements will apply to businesses that meet at least two of the following criteria:
Consolidated revenue exceeding $50 million
Consolidated gross assets totalling $25 million or more
A workforce of 100 employees or greater
What Will Be Required?
Starting from the initial reporting year, businesses will need to provide detailed information on several key areas:
Governance: Outline the structures and processes in place to manage climate-related risks and opportunities.
Strategy: Describe how climate-related issues impact the business’s strategy and financial planning.
Risk Management: Detail the processes for identifying, assessing, and managing climate-related risks.
Metrics and Targets: Report on the metrics used to assess climate-related risks and opportunities, and disclose targets for managing these issues.
Additionally, businesses will be required to report on their Scope 1 and Scope 2 greenhouse gas emissions. Scope 1 emissions are direct emissions from owned or controlled sources, while Scope 2 emissions are indirect emissions from the generation of purchased energy.
Why Is This Important?
Mandatory climate reporting is a significant step towards greater transparency and accountability in addressing climate change. By requiring businesses to disclose detailed information on their climate-related activities, the Australian Government aims to:
Enhance Investor Confidence: Investors increasingly demand transparency on environmental impacts. Detailed climate reporting can help attract investment by demonstrating a business’s commitment to sustainability.
Improve Risk Management: Understanding and managing climate-related risks can protect businesses from financial losses and operational disruptions.
Drive Sustainability: Mandatory reporting encourages businesses to adopt more sustainable practices, contributing to national and global efforts to mitigate climate change.
How to Prepare
To comply with the new reporting requirements, businesses should start preparing now. Here are some steps to get started:
Evaluate Current Practices: Assess your current governance, strategy, risk management, and metrics related to climate change. Identify any gaps or areas for improvement.
Implement Reporting Systems: Set up systems to collect and report data on Scope 1 and Scope 2 emissions. Ensure that these systems are robust and can withstand scrutiny.
Engage Stakeholders: Involve key stakeholders, including board members, executives, and employees, in the planning and implementation process. Effective climate reporting requires a coordinated effort across the organization.
Seek Expertise: Consider partnering with sustainability consultants, like Earthed Consulting, to navigate the complexities of climate reporting and ensure compliance with the new requirements.
The Australian Government’s mandatory climate reporting initiative marks a new era for businesses. By 2027, businesses meeting the specified criteria will need to provide detailed information on their climate-related activities. This move towards greater transparency and accountability is crucial for driving sustainability and managing climate-related risks. Start preparing now to ensure your business is ready for the new reporting requirements and can thrive in a more sustainable future.
At Earthed, we are dedicated to helping businesses navigate these changes and implement effective sustainability practices. Contact us today to learn how we can support your climate reporting!