Australia to Enforce Climate Reporting Requirements Beginning January 1, 2025

Implementation Details: Starting January 1, 2025, Australia will mandate climate reporting with a phased approach based on entity size and reporting structure. Entities will need to conduct scenario analyses for both a 1.5-degree and a catastrophic global warming scenario.

Phased Rollout: Large entities (Group 1) will report first, with their initial reports due by December 31, 2025. Medium entities (Group 2) will begin reporting between 2027 and 2029, followed by smaller entities (Group 3).

Overview

Australia's new climate reporting requirement, set to begin January 1, 2025, follows the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill. The bill is expected to receive Royal Assent soon, prompting entities to start preparing for compliance.

Reporting Requirements

Under the new legislation, companies must perform scenario analyses for both low (1.5-degree) and high (2.5+ degrees) global warming scenarios. This will help businesses address both climate-related physical and transition risks.

Key Dates

Group 1: Reports are due by December 31, 2025.

Group 2: Reporting will commence between 2027 and 2029.

Group 3: Initial reports are due by 2028.

Who Must Report?

Entities required to file financial reports with the Australian Securities and Investments Commission (ASIC) will need to comply if they meet the following size criteria:

Group 1: Large entities with revenues exceeding $500 million.

Group 2: Medium entities with revenues exceeding $200 million.

Group 3: Smaller entities with revenues exceeding $50 million.

Scenario Analysis Requirement

A key amendment to the legislation, advocated by the Greens, requires reporting on both a 1.5-degree scenario and a catastrophic warming scenario. This aims to ensure comprehensive consideration of the broad impacts of climate change.

These new rules are designed to enhance transparency and encourage Australian businesses to confront and manage climate risks more effectively.