Australia's 2024 ESG reporting rules – All you need to know.

Last updated: August 2024

Australia has announced a new law requiring mandatory climate reporting for certain companies which will be phased in from 2025. Where sustainability reporting in Australia might have previously been more concerned with corporate citizenship, today, it's recognized as a fundamental business practice. This is evident from KPMG's survey, with 98% of ASX100 companies engaging in sustainability reporting.

The Australian Government's approach includes a phased implementation of mandatory sustainability and ESG disclosures for large entities. This strategic step aims to match the global pace and integrates climate risk assessment into the core of financial and corporate planning.

It also aligns with Australia's commitment to a net zero future by 2050 and promises to give investors the clarity and confidence needed to back greener, cleaner investments.

In this blog, we'll guide your through what the 2024 regulations entail and how they will impact businesses across Australia.

Key points regarding Australia's ESG laws and regulations

The new ESG reporting standards in Australia will impact a wide variety of Australian entities. Let's take a look at these regulations:

Major laws and effective dates

· The Australian Accounting Standards Board (AASB) has proposed standards which companies should follow in order to fulfil their climate reporting requirement. These standards are based on the standards set by the International Sustainability Standards Board (ISSB) but modifications have been made to meet the interests of Australian companies. Furthermore, Scope 3 reporting will be phased in for companies of all sizes.

· The new regulations mandate all major corporations to comply and adopt the newly established guidelines to start reporting for fiscal years starting January 1 2025. Medium sized and smaller companies will start reporting for July 2026 fiscal years and July 2027 fiscal years respectively.

What do companies need to report?

Reporting organizations should include an annual sustainability report along with their financial reports. Within the sustainability report the company needs to include a ‘climate statement’ which covers:

a. The company’s strategy when it comes to climate related risks and opportunities and how the organization will manage these.

b. The governance processes put in place to manage climate related risks and opportunities.

c. How the company identifies climate related risks and opportunities and how these are monitored and given priority.

d. Scope 1 – 3 emissions reporting plus climate related targets and progress made to reach these goals.

International commitments

Australia's approach to ESG reporting is tightly aligned with its international pledges, such as those made under the Paris Agreement.

Australian sustainability reporting standards (ASRS)

The Australian ASB hopes to finalize the ASRS by the end of August 2024. As of July 2024 the standards are outlined below:

Standards breakdown

1. ASRS 1: Aligns with IFRS S1, a voluntary standard which relates to sustainability-related financial disclosures. This standard goes further than just climate-related impacts so companies will be better prepared to meet sustainability targets.

2. ASRS 2: Aligns with IFRS S2 relating to climate-related disclosures, but with a tailored approach to suit Australian businesses. This will be a mandatory standard.

3. SRS 101: Provides a reference framework for the above standards, including a list of acceptable documents and ESG guidelines Australia that companies can refer to for compliant reporting.

Australian companies leading in ESG and sustainability

In Australia, the drive towards sustainable business practices is growing stronger. Here are two companies leading the way that deserve your attention.

Deloitte Australia

Deloitte Australia is advancing its ESG commitments with substantial progress in several key areas:

· They've achieved a 79% reduction in Scope 1 and 2 GHG emissions and a 58% decrease in business travel emissions per employee since 2019.

· They have sourced 94% of their electricity from renewable sources, with a goal to achieve 100% in their commitment to renewable energy.

· 39% of their vehicle fleet has transitioned to electric.

· They've also engaged 20% of their suppliers to adopt science-based targets for emission reductions, with another 6% committed to doing so.

PwC Australia

PwC Australia is also on its way to reducing its environmental impact by making certain enhancements. They are taking steps forward in operational efficiency and adopting cleaner technologies across all company facilities.

· They aim to achieve net-zero emissions by 2030.

· A key part of their strategy includes transitioning to 100% renewable electricity in their offices.

· They support societal advancement by aligning their operations with the UN's Sustainable Development Goals (SDGs).

How Australian companies can navigate the ESG landscape

Here are some strategic approaches that companies can adopt to progress their ESG strategy:

· Begin by being clear about your sustainability targets and how these fit into the bigger picture of your business goals.

· Educate your team members about sustainable practices being implemented in the business and the company wide sustainability targets you have set. This step ensures sustainability will be integrated into the company culture at all levels of the business.

· Undertake regular assessments and monitor how you are progressing vs your sustainability goals so that targets can be adjusted as necessary.

· Undertake an analysis of your company supply chain. Make sure to choose supply chain partners that are committed to ESG standards.

· Promote sustainable innovation within the company when developing your products and services and share your sustainable successes with key stakeholders.

Participation in Government programs like Climate Active

Climate Active is a program initiated by the Australian Government that helps local businesses cut down on their carbon footprints. It offers a detailed plan for companies that aim to balance out their greenhouse gas emissions through careful measurement, proactive reduction, and strategic offsetting.

Invest in technologies for better ESG goal measurement and reporting

Investing in the right technologies can help you get real-time data and deeper insights into your environmental impact. Advanced technological tools make it easier to spot trends, track progress, and make informed decisions.

Here's where Zuno Carbon steps in. Our end-to-end ESG solutions is designed to simplify the complex world of ESG. Our AI powered platform allows companies to seamlessly measure their carbon emissions and track ESG metrics, centralizing sustainability data and improving data granularity and transparency. Our ESG reporting software allows organizations to meet reporting regulations with ease and produce compliance-ready reports. Whether your business is in manufacturing, energy, or any other industry, our solution can be tailored to your specific needs.

In conclusion, Australian companies need to ensure they are proactively adapting to and keeping pace with the new regulations being introduced. This can be done through a thorough review of the new ESG mandates, identifying gaps in current practices and ensuring investment in technology for better ESG data management.

Ready to transform your company’s sustainability strategy? Reach out to the team and discover how our end-to-end ESG solution can help you meet your goals.

Frequently Asked Questions (FAQs)

Is ESG reporting compulsory in Australia?

From January 2025, Australia will make it mandatory for large companies to comply with new government regulations that mandate reporting on climate-related risks and sustainability practices. Thus, ESG reporting will be obligatory for major entities across the country.

What progress is Australia making towards sustainability?

Recently, Australia has been strengthening its sustainability game through legislation mandating ESG reporting. The country is promoting renewable energy and setting net zero targets for 2050.

Is scope three reporting mandatory in Australia?

Scope 3 reporting in Australia will be mandatory but phased in gradually. Companies will have an additional year from when they first start their disclosure duties to report on Scope 3 emissions.