In a landmark decision, Australia’s House of Representatives has passed the Treasury Laws Amendment bill, ushering in a new era of mandatory climate-related reporting for large and medium-sized companies. This legislation, which includes disclosures on climate-related risks, opportunities, and greenhouse gas emissions across the value chain, is set to take effect as early as 2025 for the largest companies.
Why This Matters to Your Business
The new climate disclosure requirements are not just another regulatory hurdle; they represent a significant opportunity for businesses to lead in sustainability and transparency. By proactively addressing climate-related risks and opportunities, companies can enhance their resilience, attract investment and build trust with stakeholders. Most importantly, this legislation brings Australia into alignment with international trends which will allow Australian companies to remain competitive and a part of the global economy’s transition to net zero.
Key Highlights of the Legislation:
- Mandatory Reporting: Starting in 2025, large companies (500+ employees, $500 million+ revenue, $1 billion+ assets) must disclose climate-related risks and greenhouse gas emissions. Medium-sized companies (250+ employees, $200 million+ revenue, $500 million+ assets) will follow in 2026, with smaller companies (100+ employees, $50 million+ revenue, $25 million+ assets) starting in 2027.
- Scope 3 Emissions: Companies will have an extra year to report on indirect value chain emissions, with three years of protection from litigation concerning these disclosures. This aspect of reporting requirements will see a rapid adoption of greenhouse gas emissions measurement beyond the scope of the immediate regulated companies.
- Net Zero Economy Authority: A new body will guide Australia’s economic transformation to net zero emissions, supporting workers, regional communities, industries and investors in this transition.
What You Can Do Now
- Assess Your Current Impact: Conduct a thorough review of your company’s carbon footprint and identify areas of high emissions intensity. Understanding your baseline is crucial for setting realistic and impactful sustainability goals.
- Develop a Sustainability Strategy: Create a comprehensive plan that outlines your approach to reducing emissions, managing climate-related risks and seizing new opportunities. This strategy should be integrated into your overall strategic business plan and communicated clearly to all stakeholders.
- Engage with Stakeholders: Transparent communication is key. Establish a plan to regularly update (and listen to!) your investors, employees, partners and customers about your sustainability efforts and progress. This builds trust, fosters collaborative opportunities and demonstrates your commitment to long-term value creation.
- Embed Sustainability into Operations: Success isn’t achieved with a piece of paper, but by continual, committed action to achieve outcomes. A structured system of data management, accountability and reporting is critical to ensure that sustainability is appropriately prioritised within your business. It starts at the executive and board level, but sustainability must be aligned to management’s goals and staff’s objectives.
Don’t be Left Behind
The passage of this legislation marks a pivotal moment in Australia’s journey towards a sustainable future. By acting now, you can position your business as responsive to innovations and committed to the transition to a net zero emissions economy.
Spirit Group has undertaken our own sustainability journey to contribute to climate-positive impacts and remain competitive to changing market forces. We understand every Australian business must embark on their own sustainable transformation, and Spirit has collected and developed the right tools to support your company through the process. We are experienced solution architects for the technological needs to Australian businesses and understand the challenges associated with embedding sustainability into your operations successfully.
Speak with Spirit’s sustainability expert, Cameron Balch, today to learn how your business can be impacted by new regulations, a shifting competitive landscape and an increased expectations of supply chain partners.
