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Businesses forced to show emissions action

The government wants reporting to be mandatory for large firms.

The government wants reporting to be mandatory for large firms. Photo: AAP

Big businesses will be forced to divulge their efforts to cut greenhouse gas emissions and manage climate risk under the Albanese government’s new green investment rules.

Treasurer Jim Chalmers said an Australian climate risk disclosure framework will help funnel more investment into clean energy and other infrastructure needed to transition to a sustainable, low-carbon economy.

Dr Chalmers said investors and industry were ahead of the curve on climate risk reporting, with more than half the companies in the ASX200 providing some form of disclosure in the past financial year

“So progress has been pretty good here, even without Commonwealth leadership,” he said at an Australian Sustainable Finance Institute event in Sydney.

Australia’s greenhouse gas emissions are more than triple those of the entire rest of the Pacific.

“And as more and more capital markets and investors demand quality, comparable information on climate risks, any sort of guidance gap in Australia has the potential to quickly become an even greater investment gap.”

On Monday, the government released a consultation paper to develop Australian reporting standards that align with international standards.

The government wants reporting to be mandatory for large firms, although Dr Chalmers gave an assurance there would be a transition period before firms were made to report.

The rules will also apply to financial institutions and relevant Commonwealth entities.

“This information is need-to-know – essential to mobilising the weight of our financial system behind the net zero transition.”

Treasury will also start work on a sustainable finance strategy, with cracking down on corporate greenwashing a priority area.

Moves to enforce climate risk reporting have been welcomed by sustainable investment groups.

Director of policy at the Investor Group on Climate Change, Erwin Jackson, said climate disclosure will give investors a clearer picture when it comes to investing in green projects and companies.

“Mandated and auditable climate reporting protects investors and consumers against greenwashing in the same way that financial statements help protect against fraud,” Mr Jackson said.

AAP

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