Australia aligns climate disclosures with international standards after extensive consultation
Last week Australia passed legislation that mandates climate-related financial disclosures for large entities.
Effective from 1 January 2025, this legislation aligns reporting requirements with the global standards set by the International Sustainability Standards Board (ISSB). The law mandates that in-scope companies report under IFRS S2 (climate-related disclosures) and encourages voluntary reporting under IFRS S1 (general sustainability disclosures).
This landmark legislation follows an extensive consultation process led by the Australian Accounting Standards Board (AASB), launched in October 2023. With over 1,000 participants and 117 formal comment letters, stakeholders strongly advocated for aligning Australia’s climate reporting with international standards. The feedback prompted the AASB to adopt a voluntary approach for IFRS S1 (general sustainability disclosures) and make IFRS S2 (climate-related disclosures) mandatory. Key outcomes include omitting industry-based disclosures for now, with a new project set to assess their relevance for Australia. Stakeholders called for streamlined, internationally aligned metrics, focused on climate disclosure.
The legislation applies to entities with over 500 employees, $500 million in revenue, or $1 billion in assets, and introduces phased reporting for medium and smaller companies over the next few years.
The new law also includes a phased approach for Scope 3 emissions reporting, giving companies an additional year to fully comply and three years of protection from litigation related to these disclosures. With its emphasis on transparency, enforcement and global alignment, this legislation aims to empower investors, regulators, and stakeholders with reliable climate data.
By aligning with ISSB standards, this legislation ensures greater consistency and comparability in climate reporting, setting the stage for informed decision-making by investors and other stakeholders. Here at XBRL International we would like to extend our congratulations to the AASB and everyone involved.
John Turner, our CEO (who… err… as an Aussie expat takes an interest) added “This achievement is the result of over two years of effort and collaboration, bringing Australia in line with global reporting standards. A good first step. The next step? Australia needs to catch up with much of the rest of the world. XBRL reporting mandates now cover 84% of the world measured in terms of global market capitalisation, some USD98 trillion in total. Australian corporates currently have exactly zero digital visibility. A digital mandate Down Under is long overdue.”
Read more on the consultation results here and an update on the legislation here and here.
