Looking into Australia’s Mandatory Climate Reporting

Every business, big or small, must play a part in addressing the climate crisis. The impacts of climate change extend beyond the environment,  disrupting economies, worsening inequalities, and exacerbating disasters.  As a key stakeholder, the private sector must take part in addressing the issue, one of which is through corporate accountability measures to ensure sustainable and responsible business practices. In 2024, Australia has joined the fray of countries with mandatory climate reporting. Through a Climate-related Financial Disclosure policy, the government requires large companies to report their carbon emissions and climate-related risks starting in 2025.

Australia’s Mandatory Climate Reporting

From food security to economic stability, the climate crisis affects the most crucial pillars of our lives. One of the biggest culprits is the ever-increasing carbon emissions, which reached 37.8 Gt in 2024. Australia contributes over 1% of global emissions, reaching around 465 million tons as of mid-2023. The country’s major emissions sources are electricity, stationary energy, transport, and agriculture. These sectors are closely tied to business activities, which highlights the urgency for businesses to assess and respond to climate-related risks in their operations.

In September 2024, the Australian government passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. The act mandates large companies to disclose their carbon emissions and climate-related risks in their annual reports starting in January 2025. These disclosures include climate impacts on business models, strategies, governance, emissions (Scope 1 through 3), and other climate indicators and targets. All reports must comply with the Australian Sustainability Reporting Standards (ASRS), in line with the international IFRS S2 framework.

The policy will roll out in phases from 2025, 2026, to 2027, depending on a company’s asset value, revenue, and number of employees. This regulation aims to set a clear standard for transparent climate reporting, help prevent greenwashing, and align Australia with similar policies in the EU, Japan, Singapore, and New Zealand.

Opportunities and Challenges

Standardized climate reporting can help businesses to better measure their climate impacts. In turn, this creates opportunities for growth and innovations by designing strategies that minimize those impacts.

However, like any major shift, there are challenges. Reporting Scope 3 emissions—indirect emissions from supply chains and product use—is particularly complex, as it requires data from suppliers and customers. The National Farmers’ Federation has expressed concerns that the policy may increase administrative and financial burdens for small farmers and SMEs, many of whom lack adequate emission tracking systems. This challenge might result in rising product prices, which will eventually affect consumers.

To ease the transition, the government has introduced a phase-in period and legal protections until 2030. During this period, certain disclosures, such as Scope 3 emissions, scenario analysis, and transition plans, will be exempt from private legal action. The Australian Securities & Investments Commission (ASIC) is the only organization authorized to enforce legal action, using a pragmatic and adaptable enforcement approach supported by regulatory guidance.

Towards a More Climate-Resilient Economy

Mandatory climate reporting reinforces that sustainable development is a shared responsibility. This accountability and transparency can help governments shape better climate policy and track national progress. For investors and consumers, climate reporting allows them to keep businesses accountable in their practices and commitments.

As climate challenges and the business landscape continue to evolve, adapting sustainability disclosure to address current challenges and needs is crucial. Additionally, cross-sectoral collaborations among governments, businesses, and civil society organizations are essential to align perspectives and actions, ensuring that climate reporting becomes a tool for meaningful change rather than just an annual administrative obligation. If implemented inclusively and supported with proper technical assistance, this policy could serve as a foundation for future economic growth while strengthening resilience to face climate challenges.

Editor: Nazalea Kusuma & Kresentia Madina