The Opposition has raised concerns that the implementation of new measures could lead to an additional $2.3 billion in compliance costs for Australian businesses.
The Australian Senate passed mandatory climate reporting laws on Aug. 22, with the Labor government receiving support from the Greens and independents.
These laws will require large companies to report on their climate impact starting from January 2025, with a gradual extension to more companies over time.
Treasurer Jim Chalmers stated that these regulations aim to encourage investment in cleaner and more affordable energy as part of the transition towards achieving net zero emissions.
“These crucial reforms provide the necessary clarity and certainty for investors and companies to support the transition to net-zero emissions and further enhance Australia’s attractiveness as a destination for international capital,” he added.
Concerns Raised by the Opposition
Shadow Treasurer Angus Taylor and Shadow Minister for Financial Services Luke Howarth expressed concerns that Labor and the Greens had rushed the passage of these laws.
They highlighted Treasury analysis indicating a potential $2.3 billion compliance burden on Australian businesses.
“The United States, Canada, Japan, and most of Australia’s trading partners do not mandate reporting of scope three emissions,” the Coalition noted, expressing worries that these costs would be transferred down the supply chain to smaller businesses.
This could impact various businesses, from “a farmer banking with a large company” to “a café owner located in the premises of a major company.”
Shadow Treasurer Taylor expressed concerns that this could lead to an expansion of regulatory requirements.
“A tradesperson involved in office renovations may have to calculate the emissions from their vehicle and report it to the company for which they are carrying out the renovations,” Taylor explained.
Implementation of the Climate Reporting Regime
The new climate reporting framework mandates companies to include climate-related disclosures in an annual sustainability report.
The subsequent phases will target companies meeting specific revenue, asset, and employee thresholds.
Small and medium enterprises falling below these criteria are currently exempt, although this exemption may change in the future.
“This is because the scope 3 emissions of a large business with reporting obligations may include the emissions of its small business suppliers. Scope 3 emissions are those emissions that occur up or down a company’s supply chain,” ASIC explained.
Chalmers highlighted that ASIC and RBA’s powers have been reinforced and streamlined to better manage risks.
