Feedback on exposure draft of climate disclosure legislation: Submission to Treasury



Feedback on exposure draft of climate disclosure legislation: Submission to Treasury

The Centre for Policy Development made a submission to Treasury that providing feedback regarding their exposure draft of climate disclosure legislation.

The paper commends the proposed legislation’s ambition and alignment with international standards, but makes a number of recommendations on how it can be expanded to ensure reforms are as comprehensive as possible and effectively encourage transparency on climate risks.

It was written by Toby Phillips and Mara Hammerle.

Download The Paper

The Centre for Policy Development submission to Treasury provides feedback on their exposure draft of of climate disclosure legislation. It makes a number of recommendations to ensure the framework is as effective as possible in enhancing transparency and hastening the transition to net zero.

What is the submission about?

The submission offers feedback and a set of recommendations aimed at enhancing the effectiveness and scope of climate-related financial disclosures, which include the expansion of disclosure requirements to all publicly listed companies, ensuring all entities with significant economic ties to carbon-intensive sectors are included in the highest disclosure category and the adoption of a centralised scenario for climate disclosures to ensure consistency and comparability across disclosures.

On expanding the coverage of disclosure requirements, the submission suggests that the inclusion of all publicly listed companies is important to ensure the level of transparency and accountability is fit-for-purpose. This would include mandatory disclosures of both Scope 1 and 2 emissions for all companies, and an exemption from Scope 3 reporting only in certain circumstances

On the criteria for inclusion in the strictest disclosure category, the submission recommends an expansion beyond the currently proposed NGER threshold, so that it encompasses not just those companies with significant direct Scope 1 and Scope 2 emissions, but also those companies with high Scope 3 emissions. Including companies with significant financial ties to carbon-intensive sectors would provide a much more comprehensive picture of climate risks.

On the adoption of a centralised scenario, the submission advises that adopting an established scenario that entities can use in their analysis, and is consistent with a temperature goal of well below 2°C, would enable easier comparison of disclosures. This doesn’t need to be mandated by AASB standards, it could be published or recommended by Treasury.

Overall, the submission seeks to refine the proposed legislation to ensure it is capable of delivering comprehensive, coherent, and effective climate-related financial disclosures, facilitating the transition to a more sustainable and low-carbon economy.

Background - directors duties and climate risk

The submission draws on the Centre for Policy Development’s history of work on the economic and legal frameworks needed to navigate climate change.
The organisation commissioned the Hutley Opinions (which first examined the duties of company directors on climate risks and opportunities in Australia), produced leading research on climate risk governance in public authorities, and has hosted landmark speeches on climate change and the economy by leaders from the Reserve Bank, APRA, Treasury and ASIC.