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Credit: Appolinary Kalashnikova

Mandatory climate reporting: 3 C’s for preparedness

Energy transition specialists, Partners in Performance, stress the impending impact of mandatory non-financial climate reporting on investors, financial institutions, corporations, and trusts.

As the deadline approaches, organizations are urged to assess their readiness and establish a solid roadmap.

With the release of the Climate-related Financial Disclosure consultation paper by the Australian Treasury in June, a pivotal step towards implementing a new reporting framework is taken. This shift focuses on non-financial data such as sustainability and climate metrics. The government aims to integrate this information with existing financial structures, requiring timely action from affected entities.

Rob Fowler, Partner at Partners in Performance, emphasizes proactive measures as international frameworks accelerate. Australia’s commitment to global momentum and the imminent reporting period for listed companies necessitate timely preparation. Fowler outlines three key considerations for businesses:

  1. Capability: Evaluate expertise, skills, and technology for effective data collection and analysis.
  2. Capacity: Assess resource availability, including human, financial, and technological support.
  3. Credibility: Establish robust processes and governance to ensure trustworthy data. Third-party audits enhance credibility.

Fowler underscores the urgency due to the risks of greenwashing in Australia’s corporate landscape. Transparency and data-backed narratives are crucial defenses. Partners in Performance notes the potential value in emphasizing non-financial indicators, unlocking improvements in production, energy conservation, labor productivity, and asset uptime.

In the updated reporting regime, larger Australian companies must disclose annual data including carbon emissions, scenario analysis, and transition plans. Company boards will sign off on these alongside audited financial statements.

Enhancing capability, capacity, and credibility offers benefits beyond compliance. Strategic decisions can manage risks while driving performance improvements.

“The path to success lies in a proactive approach by all stakeholders, who must embrace this transformative change with foresight and preparation. By adapting to the evolving requirements, businesses will not only fulfill compliance mandates and minimise risk, but will also unlock opportunities for sustainable growth and global alignment.”

“In Australia, taking early action is becoming more urgent due to the current risks of greenwashing. This concept has recently graduated from being a reputational risk to a regulatory issue across Australia’s corporate, financial and consumer ecosystems. Empty narratives hold no ground anymore if companies need to access capital markets or bank finance.

“Greenwash risk management has now become a considerable focus. The best defence is through transparency and disclosure. The best offence is to have rich stories backed up by solid data. However, both these strategies are unattainable unless the right internal infrastructure and processes can support and validate those narratives. This is where external support can accelerate your progress,” says Rob. 

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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