December 14, 2022
More transparency and more investment in cleaner and cheaper energy

The Albanese Government will deliver reforms to ensure Australia can grasp the economic opportunities from more investment in cleaner, cheaper and more reliable energy, and manage the financial risks that climate change presents.

The Government has  published a consultation paper studying the development of an Australian climate risk disclosure framework denoting both businesses and investors will receive both greater clarity and certainty needed to manage climate risks and invest in new opportunities. The move will ensure large businesses and financial institutions provide more information and greater transparency on how they are tackling climate change, thus supporting the transition to net zero.

Australia had the 4th largest number of organisations issuing disclosures aligned with the Taskforce for Climate-related Financial Disclosures (TCFD) in 2021, showing that businesses are already frontrunners in meeting worldwide market and regulatory expectations for climate risk disclosures. Fundamental as it may be for Australia to now establish a framework for consistent, credible, internationally-comparable disclosures given that more and more countries progress towards global best practice as investors demand higher-quality disclosures.

The Government will consult closely with industry, financial regulators and other stakeholders to ensure the country is well positioned in global markets. Expected to be compulsory for large entities, these reporting requirements will be introduced over time. The Government also intends to apply appropriately tailored conditions to comparable Commonwealth public sector corporate institutions.

The Treasury has also been tasked by the Albanese Government to create a wide-ranging sustainable finance strategy, ensuring that a range of measures are met to strengthen Australia’s green finance markets, improve transparency, and seize opportunities as a result of growing global momentum in sustainable finance.

Developed in close co-ordination with financial regulators such as the Council of Financial Regulators (the heads of the Australian Prudential Regulation Authority, the Australian Securities and Investment Commission, the Reserve Bank of Australia and the Treasury Secretary) and other Commonwealth departments and industries, findings will be considered by the Government in early 2023 before a period of public consultation on key measures begins.

The strategy will include the development of new standards or taxonomies for sustainable investment, further initiatives to reduce greenwashing and strengthen ESG labelling, and more ambitious participation in global forums to support climate and sustainable finance frameworks and investment – especially in Oceania.

The Albanese Government’s intention is to provide a solid foundation for well-defined, comparable and credible climate-related financial reporting by Australian entities that improves transparency for customers and investors and aligns with global practice.

For more information on the public consultation process, visit the Treasury website.

Source: Treasury (Australia)