Australian Sustainability Reporting Standards expected by August 2024 – Are you ready?

Australian Sustainability Reporting Standards expected by August 2024 – Are you ready?

The move to mandate climate reporting in Australia is gathering pace, with legislators and standard setters well on their way to implementing the necessary mechanisms in support of a mandatory climate reporting framework.

Progress so far

Key steps taken so far include:

 

Topic

Action

1 March 2024

Development of Australian Sustainability Reporting Standards

Comments close on the Australian Accounting Standards Board (AASB) ED SR1 Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information. 

The Exposure Draft sought feedback on three options for incorporating the requirements of IFRS® Sustainability Disclosure Standards into an Australian Sustainability Reporting framework. The AASB’s preferred approach outlined in the Exposure Draft would result in many areas where Australian Sustainability Reporting Standards and IFRS Sustainability Disclosure Standards diverge.

27 March 2024

Climate reporting legislation

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill introduced climate reporting legislation into Parliament. The largest (Group 1) entities are expected to start on 1 January 2025 (if all goes according to plan and final legislation passes on or before 2 December 2024).

2 May 2024

Development of assurance standards for climate reporting information

The Auditing and Assurance Standards Board (AUASB) completed its consultation process on proposed assurance over climate and other sustainability information.

 

It is vital that all three elements are in place before mandatory climate reporting can take place.

Australian Sustainability Reporting Standards by August 2024?

At its April 2024 meeting, the AASB set an ‘aspirational deadline’ to finalise its Australian Sustainability Reporting Standards on climate-related financial disclosures by the end of August 2024. This is on the assumption that:

  • The Bill passes through both Houses of Parliament
  • The AASB completes its analysis of the stakeholder feedback from the consultation process (additional meetings will be held as required to assist this process).

At its May 2024 meeting, the AASB started considering feedback received about ED SR1, where it noted strong support for alignment between Australian Sustainability Reporting Standards and IFRS® Sustainability Disclosure Standards. The AASB seems to have backtracked on the approach it outlined in ED SR1, regarding both ASRS 1 and ASRS 2 only being mandatory for climate-related disclosures. The AASB is now looking at the possibility of:

  • Issuing ASRS 1 as a voluntary standard, covering the general requirements for disclosure of all sustainability-related financial information
  • Having ASRS 2 Climate-related Financial Disclosures as a mandatory standard, covering only climate-related disclosures.

The AASB did not make any decisions and will continue to consider feedback to ED SR1 in more detail at future meetings.

Is a start date of 1 January 2025 feasible?

The six-month delay for Group 1 entities is a help for entities with 30 June reporting dates (deferred from 30 June 2025 to 30 June 2026). However, the first mandatory climate reports for Group 1 entities with 31 December reporting dates stays the same, being 31 December 2025, with a start date of 1 January 2025.

We expect many Group 1 entities will find the 1 January 2025 start date challenging. Given that final climate legislation could pass less than a month before 1 January 2025 (i.e. it must pass by 2 December 2024 in order to start 1 January 2025), and optimistically, the final climate reporting standards may be finalised four months or less prior to the 1 January 2025 start date, it doesn’t give them a lot of time to prepare. In particular, systems will need to be developed for quantifying and reporting Scope 1 and Scope 2 emissions, which the AUASB, in its Consultation Paper, proposes to require limited assurance for the first year.

How BDO can help

Preparing your first climate report is a matter of urgency for Group 1 entities. Groups 2 and 3 entities shouldn’t procrastinate either, as a significant investment in time, resources and systems is required. Our sustainability reporting experts can help you to understand what this might mean for your organisation.

Contact us today.