Treasury has started a consultation on Federal Government plans to introduce standardised reporting for business climate-related disclosures, with insurers likely to be among large financial institutions initially required to meet new obligations. 

“The Government has committed to ensuring large businesses provide Australians and investors with greater transparency and accountability when it comes to their climate-related plans, financial risks, and opportunities,” the consultation paper says. 

New Zealand and the UK recently passed legislation that made climate-related disclosures mandatory for some businesses. The US, Switzerland and Singapore are also developing requirements.  

The paper says it’s proposed that mandatory climate-related financial risk disclosure requirements would apply first to large financial institutions, such as banks, insurers, credit unions and superannuation funds, to provide consistency across the economy and to support the management of prudential risk.  

Treasury says the “frontier of global best practice continues to shift outwards” following the 2017 release of recommendations by the Taskforce on Climate-Related Financial Disclosures (TCFD). 

The Financial Services Council says it’s pleased the Government is moving forward with its election commitment on disclosure standards, and a mandatory regime is needed if Australia is to meet national emissions reduction targets. 

“It will lead to better quality and more consistent disclosures across the economy and a more efficient allocation of capital toward sustainable investments,” Acting CEO Spiro Premetis said. 

“Combatting greenwashing and reaching greater data-driven consensus on what constitutes sustainable investment will lead to more efficient capital flows in Australia.” 

Submissions on the consultation paper are due by February 17. The paper is available here.