The end of financial year is approaching and Australian businesses and financial institutions are being urged to get ready for mandatory climate reporting.

 The first tranche of the regime applies targets tier one companies and applied to financial years starting on or after January 1, 2025. 

The disclosures form part of annual sustainability reports lodged under Australia’s new climate-reporting framework. 

ASIC has advised entities captured by the first phase to have governance, systems and record-keeping in place ahead of the new requirements. 

The regime is being rolled out in stages over three years, with second and third cohorts to follow from July 1, 2026, and July 1, 2027. These roughly apply to middle and smaller busineses.

Australian Securities and Investment Corporation Commissioner Kate O’Rourke said the changes would have broad implications across corporate Australia and the financial sector.

“Large businesses and financial institutions should ensure that they implement appropriate governance arrangements and sustainability record-keeping processes ahead of the mandatory climate reporting requirements taking effect from 1 January 2025,” Commissioner O’Rourke said.

She said ASIC expected a transition period as organisations built the internal capability needed to comply.

“This is a significant reform that will have far-reaching implications for many of our key stakeholders. 

“ASIC recognises there will be a period of transition as organisations develop the capabilities required to comply. 

“We will take a proportional and pragmatic approach to supervision and enforcement as industry adjusts to these new requirements.”

ASIC said it would continue monitoring voluntary sustainability disclosures during the transition and would expect entities to comply with existing legal obligations, including the prohibition on misleading or deceptive conduct. 

The regulator has also published dedicated guidance for reporting entities, including Regulatory Guide 280, which sets out who must report, what a sustainability report must contain and how ASIC will administer the regime. 

Commissioner O’Rourke said climate disclosure was becoming increasingly important as environmental considerations played a bigger role in financial decision-making.

“As more people consider environmental sustainability when making financial decisions, climate disclosure will continue to grow in importance. 

“Enhanced climate disclosure will also benefit reporting entities themselves, enabling them to better understand their climate-related risks and opportunities over the short, medium and long term.”

ASIC is also encouraging smaller and medium sized business and other not captured in the first round to begin preparing now rather than waiting until their reporting date arrives. 

The Arteh service can be sourced from the company website www.arteh.com.au.