All Commonwealth entities and Commonwealth companies will be required to complete climate disclosures. There will be two streams of disclosure requirements, as outlined in the diagram below.
There are currently at least five Commonwealth companies that meet the proposed thresholds for inclusion in the mandatory climate-related financial disclosure reform for Australia's large businesses and financial institutions. These Commonwealth companies are categorised as Stream 1 and will be subject to that reform.
Stream 2 comprises all non-corporate Commonwealth entities (NCEs), corporate Commonwealth entities (CCEs) and smaller Commonwealth companies that do not meet the proposed thresholds for mandatory reporting under the climate-related financial disclosure reform for Australia's large businesses and financial institutions. These Commonwealth entities and Commonwealth companies are required to make climate disclosures in their annual reports following the Commonwealth Climate Disclosure requirements.
Refer to the Flipchart of Commonwealth entities and companies to determine whether a government body is an NCE, CCE or Commonwealth company.
Phased implementation for Stream 2
Commencement of climate disclosure by Commonwealth entities and Commonwealth companies in Stream 2 will be phased over a period of 4 years. Commonwealth entities and Commonwealth companies will be divided into 4 tranches as part of the phased approach.
Stream 2 will commence with a Commonwealth Climate Disclosure Pilot for all Departments of State in their FY2023-24 annual reports (tranche 0).
Implementation will then be phased-in according to entity type, size and profile (tranches 1, 2 then 3). Refer to the table below for the implementation timeline of the 4 tranches.
While all Commonwealth entities and Commonwealth companies will be required to publicly disclose their climate risks and opportunities in their FY2026-27 annual reports, entities are encouraged to voluntarily disclose their climate risk management activity before their allocated date.
First disclosure for FY2023-24 using Commonwealth Climate Disclosure Pilot requirements and then onwards using Commonwealth Climate Disclosure requirements
Entities: All Departments of State.
First disclosure for FY2024-25 and then onwards
Entities:
- All Commonwealth entities that are a 'controlling corporation' under the National Greenhouse and Energy Reporting Act 2007.
- All Specialist Investment Vehicles, the Future Fund Management Agency and the Commonwealth Superannuation Corporation.
- Entities that fulfill two out of the four thresholds below:
- Referenced in Part 1 of the Climate Change (Consequential Amendments) Act 2022;
- Has over 500 employees;
- The value of total assets at the end of the financial year of the entity/company and any entities it controls is $1 billion or more;
- The annual expense for the financial year is $500 million or more.
- All Commonwealth entities with responsibility for climate change or climate risk disclosure policy design or implementation, not otherwise covered by the previous criteria.
First disclosure for FY2025-26 and then onwards
Entities:
Entities that fulfill two out of the four thresholds below:
- Referenced in Part 1 of the Climate Change (Consequential Amendments) Act 2022;
- Has over 250 employees;
- The value of total assets at the end of the financial year of the entity/company and any entities it controls is $500 million or more;
- The annual expense for the financial year is $200 million or more.
First disclosure for FY2026-27 and then onwards
Entities:
All remaining NCEs, CCEs and Commonwealth companies, including Commonwealth companies that align with Group 3 in the climate-related financial disclosure reform for Australia’s large businesses and financial institutions.
Climate disclosure requirements
The climate disclosure standards being developed by the Australian Accounting Standards Board (AASB) will apply to Stream 1 Commonwealth companies. These standards will be based on the International Sustainability Standards Board's (ISSB) four pillars of governance, strategy, risk management and metrics and targets, with specific tailoring for Australia's large businesses and financial institutions.
The Commonwealth Climate Disclosure requirements for Stream 2 Commonwealth entities and Commonwealth companies are being developed by the Department of Finance. These requirements will set out reporting obligations according to the three Commonwealth entity types (NCE, CCE or Commonwealth company). The requirements will align with the climate disclosure standards set internationally by the ISSB and nationally by the AASB. However, there will be specific tailoring to account for the differences in the structure, objectives and functions of Commonwealth entities and Commonwealth companies. It will also account for the regulatory environments under which they operate and their interaction with other Government policies, such as the APS Net Zero by 2030 target and associated emissions accounting. The Commonwealth Climate Disclosure requirements are expected to be finalised in mid-2024.
Resource Management Guides (RMGs) for annual reporting by entity type (RMGs 135, 136 and 137) will be updated to communicate the Commonwealth Climate Disclosure requirements.
Verification and assurance
The Department of Finance will design a verification and assurance regime for Stream 2 in consultation with the Australian National Audit Office (ANAO) and affected entities. The focus of the regime will be on improving the quality of climate disclosures. The Department of Finance will be responsible for annual monitoring of entities’ compliance.
Building APS capability
Capability building support is being provided to Commonwealth entities and Commonwealth companies to help them meet their climate disclosure obligations. Tools and guidance, a community of practice and training opportunities are available for affected Commonwealth entities and Commonwealth companies to assist in the development of best-practice climate disclosure.
The Climate Action in Government Operations Unit is continuing to provide support to entities to account for their greenhouse gas emissions and, for relevant entities, to meet their obligations under the APS Net Zero by 2030 target.
The Department of Climate Change, Energy, the Environment and Water (DCCEEW), through its Climate Risk and Opportunity Management Program, is providing guidance and support to enable Commonwealth entities and Commonwealth companies to identify, assess, prioritise and manage their climate risks and opportunities.
