AICD’s submission to the Senate Inquiry into the Climate Reporting Bill

The AICD reiterated its support of the introduction of a mandatory climate-related disclosure regime which is internationally aligned and that meets the policy objectives of high-quality, comparable and useful climate disclosures.

We noted that while there are some aspects of the Bill that could be enhanced (including the thresholds and coverage of Group 3 cohort), we consider the Bill strikes a sensible and pragmatic balance which should achieve its stated policy objectives. To provide business certainty and facilitate a timely uplift in reporting practices, we encourage the Bill to be passed without undue delay.

Key points of the submission:

• The Modified Liability and Qualified Director Declaration provisions will be critical to the successful implementation of the regime. It is appropriate that this once-in-a-generation reform to corporate reporting is accompanied by transitional measures.  Modified Liability will encourage fulsome reporting, while the Qualified Director Declaration appropriately reflects the reality of implementing a novel and complex new reporting regime.
• To encourage discussion of key climate issues outside of the narrow confines of the mandated Sustainability Report, we would encourage the Modified Liability regime to apply to protected statements subsequently replicated outside of the Sustainability Report (not just those required by law).
• The proposed thresholds for Group 3 entities are too low such that the compliance burden for these entities will be disproportionate to their climate impact. We recommend increasing the revenue threshold to $100 million and gross assets threshold to $50 million and/or that Group 3 entities be subject to a simplified climate reporting standard.
• We are concerned about the inclusion of Not-for-Profits (NFPs), particularly given the acceptance that charities registered with the Australian Charities and Not-for-Profits Commission (ACNC) be excluded.
• The broad, unfettered nature of the Minister’s powers under sections 296A(4) and (5) and 296C(2) should be reconsidered given any expansion of mandatory sustainability reporting should be subject to the usual public consultation and parliamentary process.
• We support the decision to tie the regime’s commencement to the passage of the Bill. We also support the delay of the regime’s commencement from 1 July 2024 (as was previously proposed by Treasury) to 1 January 2025.