Date posted: 08/03/2023

What does 2023 hold for sustainability and climate-related disclosure?

We will see milestone developments internationally and locally in 2023

In brief

  • Progress on mandatory disclosures in both New Zealand and Australia
  • Final decisions made on the technical content of first two IFRS sustainability standards
  • Share your thoughts on the role of CAs in climate-related matters

2023 has truly started off with a bang in Australia, New Zealand and internationally when it comes to climate and sustainability reporting. We have seen the commencement of mandatory climate-related disclosures(CRD) taking affect in New Zealand, the preliminary consultation to develop Australia’s climate-related disclosure framework and milestone developments at an international level as the International Sustainability Standards Board (ISSB) has taken its final decisions on the technical content  and moved to the drafting and balloting stage ahead of issuing the first two IFRS Sustainability Standards by end of Q2 2023. 

Progress in New Zealand 

The CRD standards, which require certain organisations to disclose information about their climate-related risks and opportunities, took effect from 1 January 2023. 

We also provided our feedback to the Ministry of Business, Innovation and Employment (MBIE) on assurance over climate related disclosures: occupational regulation and expanding the scope of assurance. Key points in our submission included  for the CRD assurance practitioner licencing regime to be established as soon as possible and the need for the assurance regime to be future proofed to go beyond climate to broader sustainability-related reporting. 

What is being proposed in Australia? 

In 2022, the Government committed to standardise and internationally align disclosure of climate-related financial risks and opportunities in Australia for large-listed entities and financial institutions. In December 2022, Treasury released their consultation paper seeking initial views on key considerations for the design and implementation of the framework. 

As a part of our engagement with members during the consultation process, we convened a roundtable bringing together a cross spectrum of our membership together with Treasury to discuss important considerations to the design of the proposed disclosure regime. Our members were broadly aligned that for Australia to operate within global capital markets, international alignment with the global baseline sustainability standards being developed by the ISSB would be important. Members also stressed that whilst climate is the first area of focus for sustainability reporting, any framework developed would need to be future proof and designed to easily incorporate subsequent topics such as nature and diversity and inclusion and broader human rights.

In addition to our joint submission with CPA Australia, we also contributed to joint submissions with other peak bodies including the Australian Sustainable Finance Institute as well as a specific response in relation to assurance through the Australian Public Policy Committee (APPC). 

Greenwashing, a focus for regulators 

Regulators in both Australia and New Zealand continue to stress the importance that entities do not mislead the market in relation to sustainability. In March 2023, the Australian Securities and Investments Commission (ASIC) announced court proceedings against Mercer Superannuation for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. The Australian Competition and Consumer Commission (ACCC) also announced it will be investigating a number of businesses following an internet sweep which found concerning claims about environmental or sustainability practices. In 2022, the Financial Markets Authority (FMA) in New Zealand also signaled greenwashing as a priority for the year. 

So, what’s next after climate? 

The Department of Climate Change, Energy, the Environment, and Water (DCCEEW) in Australia has proposed the establishment of a nature repair market to encourage investment in biodiversity and drive environmental improvements across Australia. The market, which will be underpinned by legislation, is voluntary and proposes to enable landholders to ‘sell’ biodiversity certificates. In our submission to this consultation , we stress the importance for work being carried out in climate reporting to be considered in parallel with these nature-related developments. The accounting profession has a significant role to play in preparing, measuring and providing rigor and transparency to sustainability disclosures and markets, in a similar way to the financial market.  

In Australia, the Clean Energy Regulator has also been consulting proposed reforms to the safeguard mechanism , in line with the Government’s increased National Disclosure Commitment and the targets it has set for itself and Australia. In our submission we outline our broad support of the proposed reforms and continue to support the use of a declining baseline. 

What can you do? 

Have your say on climate in our annual member survey. The survey is a way for you to share your thoughts on the role of CAs in climate-related matters and how we can influence the future of the profession. The multiple-choice survey takes approx. 10 mins to complete and closes on the 9th of March. I encourage you to share your thoughts.  

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