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Forvis Mazars publishes a new report on climate preparedness, featuring insights from 52 small ASX firms
Forvis Mazars investigates how prepared companies are to report according to the proposed Australian climate-related financial disclosure standards.
Australia has made a significant step toward the introduction of mandatory climate-related financial disclosures for many companies in Australia, whether listed or unlisted. The Bill was introduced into Parliament at the end of March and passed the House of Representatives on 6 June 2024. With this proposed mandate looming, how prepared are these companies to report according to the disclosure standards?
The climate-related financial disclosures proposal follows on from the Corporate Sustainability Reporting Directive (CSRD) that was entered into force and introduced specific climate disclosure requirements throughout Europe. In the same year, the International Sustainability Standards Board issued IFRS S1 and S2 that are progressively endorsed by different countries around the world, including Australia.
In Australia, the proposed reporting period for climate-related financial disclosures would start as early as 1st January 2025 for companies meeting two of these three criteria:
1. consolidated revenue ≥ $500 million,
2. consolidated gross assets ≥ $1 billion; or
3. number of employees ≥ 500.
This led the Forvis Mazars experts to investigate how prepared these companies are to report according to the proposed Australian climate-related financial disclosure standards.
Their research is based on the 2023 reporting (up to 10 January 2024) of 52 Australian Securities Exchange (ASX) listed companies with a market capitalisation between $1 billion and $1.5 billion.
Key Findings
- 57% of the companies clearly identify or broadly mention climate-related risks.
- 33% of the companies have set Net Zero targets for scope 1 and 2 GHG emissions.
- 11% of the companies report in accordance with the eleven TCFD recommendations and 31% partially reporting on these recommendations.
- 71% of the companies have calculated their scope 1 and 2 GHG emissions, but only 37% have calculated their scope 3 emissions.
- 23% of the companies have performed a scenario analysis.
The introduction of mandatory climate-related information disclosures in Australia will require many companies to step up their efforts. Importantly, companies need to:
- Build up climate capabilities and educate board members.
- Identify gaps and develop a roadmap.
- Involve key employees across multiple functions and clearly define responsibilities
Drawing on insights from the interpretive report “Achieving Effective Internal Control Over Sustainability Reporting” (ICSR) issued by the COSO and the findings of their research, Forvis Marzars presents a set of 28 key considerations to help companies prepare their climate reporting.
Download the full report to learn how small ASX listed companies have made progress in their climate reporting in Australia.
Source: Forvis Mazars
