Feedback on proposed climate-related financial disclosure framework: Submission to Treasury



Feedback on proposed climate-related financial disclosure framework: Submission to Treasury

The Centre for Policy Development made a follow up submission to Treasury regarding their ‘climate-related financial disclosure: second consultation process’. 

The paper recommends that the Treasury’s mandatory climate-related financial disclosure framework should have no exemptions for small publicly listed companies, and all should report at least their scope 1 and 2 emissions. It also suggests that entities with significant economic exposure to carbon-intensive businesses should automatically be included in the highest disclosure group, regardless of their direct emissions.

It was written by Toby Phillips.

Download The Paper

The Centre for Policy Development submission to Treasury provides feedback on their proposed climate-related financial disclosure framework. 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 provides feedback and recommendations on the government’s proposed mandatory disclosure framework across 3 key areas; its coverage across the economy, it’s use of scenario analysis and transition planning, and the timing for implementation across defined entity groups.

On coverage across the economy, the paper recommends removing disclosure exemptions from small publicly listed companies. This ensures that even smaller companies are contributing to market information flows and will increase accuracy and transparency.  It suggests that, at a minimum, smaller companies should be required to report their scope 1 and scope 2 emissions, recognising the balance between the need for comprehensive disclosure with the recognition of the potential burden on smaller entities.

On the importance of scenario analysis and transition planning, the paper recommends utilising established scenarios, such as the NGFS scenarios or the IEA Net Zero scenario, as benchmarks to ensure consistency and comparability of disclosures. This would ensure that disclosure entities are not able to select overly favourable scenarios, as well as ensuring that transition plans are aligned with global efforts to limit temperature rises to well below 2°C.

On timing for group inclusions in mandatory disclosure rules, the paper suggest that the proposed two-year timing between the commencement of Group 1 and Group 2 is unnecessary, and that Group2 should commence in 2025-26 with Group 3 commencing in 2026-27. This would ensure the transition is both swift and manageable.

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.