The sustainability-related reporting landscape evolved at a rapid pace in 2023, highlighting the increasing demand for information from investors and stakeholders. Jurisdictions, like Australia, have also moved quickly with the release of legislation and reporting frameworks linked to national ambition and international commitments.

Landscape update

The International Sustainability Standards Board (ISSB)

In June 2023, the ISSB released its inaugural standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related disclosures (IFRS S2) which set the international baseline for robust, consistent and comparable disclosures. The ISSB also conducted a consultation seeking stakeholder views on what the board’s agenda priorities should be for the next 2 years. We provided joint feedback to the ISSB including that the critical priority should be focused on effective implementation of the standards. As ISSB vice-chair and CA ANZ fellow Sue Lloyd puts it ‘[the ISSB] now needs to provide the after sales service’.

The Taskforce on Nature-related financial disclosures (TNFD)

The TNFD released their final recommendations in September 2023. The TNFD recommendations are based on the same framework as used for climate and by the ISSB and are considered a key milestone in understanding and disclosing the relationships between nature, business and financial capital. The recommendations are aligned with the requirements of the 2022 Kunming-Montreal Global Biodiversity Framework, ISSB and GRI reporting standards.

Australia

In November 2023, the Australian Accounting Standards Board (AASB) released their exposure draft of the first Australian Sustainability Reporting Standards focused on climate. The 120-day consultation, which closes on 1 March 2024, uses the international baseline of IFRS S1 and S2 with Australian modifications, such as the inclusion of not-for-profit entities. It is expected that the first   reporting period in Australia will commence from 1 July 2024 for certain entities.

On 12 January 2024, the Treasurer, The Hon Jim Chalmers, announced draft legislation amending the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001 (Cth) to introduce climate-related financial disclosures. The consultation, which closes on 9 February 2024, outlines entities that will be   required to report, reporting content, the location of reporting, assurance requirements for disclosures and the application of liability for disclosures.

In summary:

• Who will be required to report and starting from when?

^{Source: Treasury, climate-related financial disclosure: exposure draft legislation policy statement} 

• Climate-related financial disclosures will sit within a sustainability report, which will form the fourth report required as part of annual financial reporting obligations and be contained in an entity’s annual report.
• The Australian Auditing and Assurance Board (AUASB) will develop assurance standards for Australia and set out a pathway for phasing of requirements. A phased in assurance requirement is expected to commence with assurance of  scope 1 and 2 emissions disclosures from years commencing 1 July 2024 onwards and end with assurance of all climate disclosures made from years commencing 1 July 2030.
• Government:
  • Is seeking feedback on whether a 1 January 2025 commencement date (instead of 1 July 2024) would improve the quality of reporting in the transition year.
  • Has proposed a modified liability fixed period for reports issued between 1 July 2025 – 30 June 2028, during which time only the regulator can bring action in relation to certain disclosures.
  • will conduct a review of climate disclosure requirements in 2028-29.

New Zealand

As captured entities in New Zealand close out their first reporting period under mandatory climate-related disclosures, the XRB, in October 2023, released a comparison document which outlines the differences between Aotearoa New Zealand Climate Standards (NZ CS) and IFRS S1 and S2. The XRB and FMA have also both released multiple guidance documents to support the implementation of the climate-related disclosure regime including on scenario analysis and transition plans.

What else can we expect in 2024?

Nature and biodiversity

Already a theme which is gaining international momentum, particularly with the release of the TNFD recommendations, businesses now have the foundation to consider nature and biodiversity risks and opportunities for their organisations. Boards and management will need to really understand their impacts and dependencies on nature. Consideration of nature-based solutions to address climate-change will also have increased focus 2024.

I was honored to be appointed to Australia's Nature Finance Council in 2023 and look forward to working with other Council members to provide advice to the Government in 2024. The Australian Government is also hosting the first Global Nature Positive Summit in Sydney in October 2024.

CA Sustainability Community

I encourage our members to participate and register your interest for the CA Sustainability Community.  In 2024, CA ANZ will provide Community members insights into key sustainability areas such as greenwashing and integrating nature disclosures.

Climate and nature survey

We encourage you to have your say and share your thoughts with us about sustainability, climate and nature through our annual survey. We have produced tools and resources, such as the carbon accounting FAQs, as a direct result of members feedback from past surveys and established the CA Sustainability Community to support members in this space.