As of 1 January 2025, many large Australian businesses and financial institutions are now required to prepare annual sustainability reports containing mandatory climate-related financial disclosures. This regime has been in the making for several years, having undergone three broad consultations and garnered significant support from corporate Australia. The introduction of this regime represents a significant step towards integrating climate considerations into business operations and strategies. It aligns with the broader global trend towards mandatory climate reporting, notwithstanding delays and paring back in some notable jurisdictions, as we’ve written about elsewhere.
With media reports of the potential ‘scrapping’ of mandatory reporting in Australia, many entities are understandably frustrated. For some, the potential reversal of mandatory reporting requirements in Australia and beyond could undermine the progress made to date and the investments already committed to climate governance. For others, it is another example of the inconsistency we have seen in Australian politics for so many years now when it comes to climate change. It is particularly concerning in circumstances where 2024 was reported to be the warmest year on record, at about 1.55°C above pre-industrial levels.
However, notwithstanding these developments, our analysis of climate reports and disclosures made by ASX50 entities[1] in 2024 finds that many are making significant progress in their climate governance and reporting. A key part of this involves these entities exploring climate-related opportunities through meaningful stakeholder engagement, mergers and acquisitions activity, targeted investments and new technologies. These efforts reflect a broader, long-term strategy to integrate climate considerations into business operations and to leverage opportunities for sustainable growth.
We recognise that each sector is facing unique challenges and managing risks in different ways. Accordingly, in this report, we explore the most relevant developments and insights broken down by 8 sectors.
Entities in the S&P/ASX 50 Index as of 16 January 2025 (ASX50). In preparing this report, we have relied on public disclosures of, and relating to, the ASX50 and have not independently verified those disclosures. For consistency, we have also referred to them as entities throughout this report notwithstanding that some might be better identified as companies or staples, for example.
Across these sectors, there are common themes as entities look to align their processes with the mandatory regime. We are helping clients with:
- supporting directors to understand the new liability regime and the practical steps directors can take to satisfy their ‘reasonable steps’ and other duties;
- optimising reporting structure (including obtaining ASIC relief where necessary);
- undertaking a comprehensive greenwashing risk review prior to release of disclosures (including in relation to forward-looking statements); and
- confirming the interpretation of other international frameworks brought within the mandatory regime (like the greenhouse gas protocol) and the interaction of mandatory reporting with other Australian law.
For further advice on climate governance and reporting, please contact a member of the King & Wood Mallesons or Owl Advisory team. We are here to steer you through the transition and set you up for long-term success in the face of evolving climate challenges.
We have included Computershare Limited (CPU) in Communication services and IT for the purpose of this report, notwithstanding its GICS classification in industrials, and ASX Limited (ASX) notwithstanding its GICS classification in financials.
EXPLORE THE SECTORS
Download
