In October 2023, The Australian Accounting Standards Board (AASB) released Exposure Draft ED SR1 Australian Sustainability Reporting   Standards – Disclosure of Climate-related Financial Information outlining   proposed climate-related financial disclosure requirements. The 120-day consultation closed on 1 March 2024.

CA ANZ and CPA Australia jointly responded to the AASB’s exposure draft and have expressed a number of significant concerns.

In our joint submission we expressed our support of the AASB’s efforts to develop ASRS and appreciate the challenge of meeting the Government’s accelerated timeframe. We also note the following key points:

• We have significant concerns about the deviation of ASRS from the International Sustainability Standards Board (ISSB) Standards IFRS S1 General requirements for disclosure of sustainability-related financial information (IFRS S1) and IFRS   S2 Climate-related disclosures (IFRS S2).
• We encourage the AASB, as an independent standard setting board, to issue ASRS 1 with the broader sustainability-related financial disclosures perspective contained within IFRS S1.
• We strongly believe that Government and the AASB have a significant role to play in capacity building and should prioritise understanding in physical and transitional climate risks and the measurement of greenhouse gas (GHG) emissions, within Australia.
• We are concerned about the adverse cost to benefit ratio for many “Group 3” reporting entities and   their users of climate-related disclosures. We recommend a simplified disclosure regime be considered for smaller, unlisted entities to be developed by the AASB, with the AUASB being responsible for the audit and assurance thereof.
• Further clarification is required for terms used within the ASRS, such as ‘not an exhaustive search’ and ‘to the extent practicable’.
• Modifications to industry based metric requirements have resulted in voluntary disclosures which is a significant deviation from the IFRS Sustainability Disclosure Standards. We recommend a transition measure with mandatory industry metric requirements from 1 July 2030.
• We recommend AASB adopts ‘framework neutral’ references to industry based metric disclosures and do not consider references to The Australian and New Zealand Standard Industrial Classification (ANZSIC) appropriate.
• Whilst we understand the preference for NGERS aligned emissions measurement, we recommend entities should be provided with flexibility to determine the most appropriate GHG emission measurement methodologies for their users, enabling international alignment where relevant.