Australia’s new climate reporting legislation will come into force next year.

The Albanese Government has unveiled changes in Australia’s approach to climate reporting and financial market infrastructure protection. 

This legislative action, prompted by a decade of perceived inaction, seeks to modernise Australia's financial landscape, facilitating a smoother transition to a net-zero economy and safeguarding against financial crises.

The mandatory climate reporting regime is designed to address the need for transparency in how companies manage climate risks, requiring extensive climate-related disclosures. 

Starting January 1, 2025, major Australian companies will have to include detailed climate-related information in their annual financial reports. 

Treasurer Jim Chalmers has described it as a “rigorous, internationally-aligned” climate disclosure regime.

Alongside climate reporting, the legislation introduces new measures to fortify Australia's financial market infrastructure. 

In the event of a crisis, the Reserve Bank of Australia (RBA) is being given the power to intervene swiftly, ensuring the continuity of critical financial services. 

The business and investment community appears to have received the legislation warmly.

The Australian Council of Superannuation Investors (ACSI) says that 70 per cent of ASX 200 companies are already voluntarily adhering to international climate disclosure standards. 

ACSI says mandatory reporting is a step forward in painting a comprehensive picture of the economy's climate risk management.

Similarly, the Business Council of Australia welcomes the initiative, with CEO Bran Black stressing the importance of climate disclosures for informed investment decisions. 

The alignment with international standards, Black notes, is crucial for attracting and retaining capital in the transition to a greener economy.