The Business Council of Australia welcomes the opportunity to provide views on Treasury’s proposed positions for the detailed implementation and sequencing of standardised, internationally aligned requirements for disclosure of climate related financial risks and opportunities in Australia (the new requirements).
Our members support continuous improvement in the quality of climate-related financial disclosures to guide investment decision making that has due regard for climate related risks and opportunities impacting investments.
It is the BCA’s strong contention that the primary purpose of the new requirements should be to help investors form the most rigorous view possible of climate risks and opportunities as they pertain to investments in corporations.
With this purpose in mind, we make the following key comments on the positions proposed in the consultation paper.
- Close alignment of Australia’s requirements with the new International Sustainability Standards Board (ISSB) Standards is important so that investors can make valid comparisons between different corporations in different areas.
- There should be a ‘subsidiary exemption’ available to entities with parent corporations that are required to report climate related financial disclosures at an aggregated level in jurisdictions aligned to the new ISSB Standards.
- The commencement date should give all covered entities, including Group 1, a minimum of 12 months from the date legislation is proclaimed and climate disclosure standards have been finalised to develop internal capabilities and capacity to meet the disclosure requirements.
- Government can greatly assist by making ‘off the shelf’ scenarios available for use by reporting entities, as an option, but it is critical that reporting entities be allowed to use scenarios from other sources at their discretion.
- The timing and level of third party assurance, particularly across different reporting content and disclosures, needs to be gradual and pragmatic.
- A modified liability approach is supported and the proposed transition period should be expanded in its scope and reviewed in its third year (and potentially extended to five years if needed).