Schedule 4 to the (uninspiringly named) Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 marks a generational change in annual company reporting. Over 6,000 entities are expected to be climate reporting by 2030. The precise detail of what needs to be reported will be set out in an Australian Sustainability Reporting Standard which the Australian Accounting Standards Board is expected to finalise very shortly (in a week or two).

The Standard will be closely aligned with IFRS Sustainability Disclosure Standards, maximising global consistency and comparability. You can read more about what mandatory climate-related financial reporting requires in our previous publication Mandatory climate reporting in Australia - Landmark Climate Disclosure Bill introduced.

In short:

• For the largest companies who classify as Group 1 entities under Chapter 2M of the Corporations Act will be required to report from the first financial year that commences after 1 January 2025. For most Australian companies in Group 1, that means the year starting 1 July 2025 will be the beginning of their first mandatory climate reporting period. But a few will start their first reporting period on 1 January 2025 – now only 4 months away.
• Group 2 entities under Chapter 2M of the Corporations Act, will need to report from the first financial year that commences on 1 July 2026.
• From 1 July 2027, the requirements would extend to all other in-scope entities.

What you need to do now

A key lesson is to be heeded from the experience of our colleagues at MinterEllisonRuddWatts, when helping New Zealand and Australian companies subject to the NZ regime navigate the first year of their mandatory climate reporting this year. That is, companies adopting a ‘just in time for filing' or 'we'll cross that bridge when we come to it' approach is a recipe for major problems.

At least the governance and record-keeping arrangements should be in place well before the start of the first reporting period. And climate reporting entities will usually want to be able to report that climate related risks and opportunities were factored into their strategic planning and risk management through-out the reporting period. You can read more here about the lessons from New Zealand experience Mandatory Climate Reporting: Lessons for Australian companies from across 'The Ditch'!.

For companies that have been waiting to see what happens with this legislation, it is well and truly time now to assess carefully how ready you are for mandatory climate reporting. Whether you are an experienced climate and sustainability reporter or a recent entrant some uplift on current voluntary climate reporting will be required.