[Open – closing date: 21 July 2023] Climate-related financial disclosure: Second consultation

The Australian Department of the Treasury has released a consultation paper seeking input on the implementation and sequencing of standardized, internationally-aligned requirements for disclosing climate-related financial risks and opportunities in the country.
The paper emphasizes the need for companies to include climate-related information in fundraising documents to assist investors in evaluating risks and returns for informed decision-making. It recommends the use of scenario analysis to assess and report on climate-related risks and opportunities. Initially, qualitative scenario analysis would be required, but eventually, a transition to quantitative scenario analysis is recommended. The paper also suggests that companies should report their emissions and energy data in their company reports consistent with their reporting obligations under the National Greenhouse and Energy Reporting Act.
To ensure flexibility and accommodate future reporting developments, companies are encouraged to integrate climate-related risk and opportunity into their decision-making processes using existing frameworks. The paper highlights the importance of disclosing information about the basis of scenario analysis, including methodology, limitations, and critical assumptions, to help users understand the disclosed information. During the transition period, entities would be required to undertake qualitative scenario analysis, with the level of sophistication dependent on the experience of reporting entities, their exposure to climate-related risk, and the availability of supporting information.
The paper also recommends that companies provide assurance on their climate-related financial disclosures, which can be obtained through internal or external auditors or other qualified third parties. The level of assurance obtained and the level of materiality applied to the disclosed information should be disclosed by the companies.
Furthermore, companies should disclose their governance and risk management processes for identifying, assessing, and managing climate-related risks and opportunities. The involvement of boards and management in these processes should also be disclosed.
Interested parties can submit responses to the consultation until 21 July 2023, preferably through electronic lodgement in Word or RTF format. The Australian Department of the Treasury welcomes comments on the proposed positions related to coverage, content, framework, and liability, with a focus on their workability and clarity in aligning with policy principles outlined in the consultation paper.