On 12 January 2024, Treasury released the climate related financial disclosure: exposure draft legislation. The consultation closed on 9 February 2024.

CA ANZ and CPA Australia jointly responded to Treasury’s draft legislation which outlined the legal framework for mandatory climate related financial disclosures in Australia.

In our joint submission, we expressed our support for the Australian Accounting Standards Board’s (AASB) remit to develop and maintain Australian Sustainability-related Reporting Standards (ASRS) and outline several significant issues relating to assurance, disclosure requirements and liability considerations that will require clarification or review.

We support the proposal to amend the legislation to a 1 January 2025 commencement date and highlight the following key points:

• We continue to be concerned about the adverse cost to benefit ratio for many Group 3 entities and the users of this information. We recommend increasing the reporting threshold and introducing a reduced disclosure regime for smaller, unlisted entities with assurance requirements proportionate to size.
• We consider that additional clarity is required to support the proposed materiality exemption for Group 3 entities.
• In our opinion, legislation should not contain definitions or excessive detail relating to technical or reporting information, instead this should be determined through the appropriate independent standard setting boards.
• The Auditing and Assurance Standards Board’s (AUASB) mandate to “set out a pathway for phasing in assurance requirements over time” has not been provided for in the ED.
• It is not clear, in the ED, who must be appointed as auditor, and we recommend this is clarified in line with the policy position statement.
• We recommend that the modified liability provisions be extended to auditors (assurance practitioners).
• The ED refers to ‘entities’ which is not in line with the policy position statement which refers to capturing entities required to produce financial statements in line with Chapter 2M of the Corporations Act.