Introduction
Australia has taken a big step in making climate reporting mandatory for large companies. From January 2025 more than 1800 organizations will have to disclose information about their climate risks, governance structures, and impact on the environment. This new law is designed to bring transparency and help investors, regulators, and the public understand how businesses are responding to climate change.Â
For accountants and finance professionals this rule means climate data will now become part of mainstream financial reporting. Just like preparing balance sheets or income statements companies will have to prepare detailed climate disclosures following set standards. This is not only about compliance but also about building trust with stakeholders who want to see responsible and sustainable business practices.Â
The move brings Australia in line with other regions like the European Union and the United States where climate related disclosures are already growing. It also gives accountants auditors, and sustainability experts a key role in making sure the numbers and reports are accurate and reliable.Â
Who Will Be Affected by the New Climate Reporting Law
The new law climate reporting in Australia is not for every company. It mainly targets the biggest organizations that have a significant impact on the economy and the environment. Around 1800 companies will be covered at the first stage. These include large listed companies, banks, insurance companies, and other businesses that meet specific size and financial thresholds. Over time smaller listed entities may also be added as the framework develops.Â
For accountants and finance teams this means new responsibilities. Preparing climate related financial disclosures is not only about numbers but also about understanding greenhouse gas emissions, energy use, and the company exposure to climate risks. Accountants will need to work closely with sustainability experts, engineers, and risk managers to gather the right data.Â
Auditors will also play a central role. Just like financial statements are audited for accuracy climate reports will need assurance so that investors and regulators can rely on them. This creates both a challenge and an opportunity for accounting firms. They must build skills in ESG reporting and climate accounting if they want to stay relevant and provide value to clients.Â
This law will also affect boards of directors and senior management. They will be held accountable for ensuring that climate risks are identified and disclosed properly. In this way, climate reporting becomes not just a compliance exercise but a governance matter as well.
What Companies Need to Report for climate reporting in Australia
The new climate reporting in australia law is based on the International Sustainability Standards Board (ISSB) framework. This means that companies will follow global standards when preparing their disclosures. The focus will be on consistency and comparability so that investors can easily analyze information across industries.Â
Companies will need to report on climate risks that could affect their business. This includes both physical risks like floods or heatwaves, and transition risks, such as new regulations or changes in consumer demand. These risks must be explained clearly along with their potential financial impact.Â
Another key area is governance. Companies must show how their boards and management are overseeing climate risks and opportunities. This makes climate reporting part of corporate strategy and not just a separate sustainability document.
Emission reporting will also be required. Firms will have to disclose their Scope 1 and Scope 2 emissions. For many Scope 3 emissions may also be included if they are significant. This will push companies to track emissions not only from their own operations but also from their supply chains and partners.Â
Finally, firms must provide forward-looking information. They need to show how they are preparing for a low-carbon future, what targets they have set, and how progress will be measured. This type of disclosure is meant to give investors confidence that companies are adapting to long-term climate challenges.
Timeline and Implementation Stages
The climate reporting law in Australia will come into effect from 1 January 2025. Howeve it will be rolled out in stages so that companies and regulators have enough time to adjust.Â
In the first stage the largest companies will be covered. These include listed entities, financial institutions, and businesses that cross certain revenue, asset, or employee thresholds. They will have to start reporting from 2025 onwards.Â
In the second stage, medium-sized listed companies will be brought under the framework. This stage is expected to start one year later, around 2026. It will allow smaller entities to prepare systems for collecting and verifying climate data.
The third stage may expand further to cover a wider range of businesses if regulators feel the system is working smoothly. This step by step approach ensures that the reporting process becomes part of the corporate culture without creating too much pressure at once.Â
For accountants, auditors, and finance teams, this timeline is critical. It gives them time to train staff update internal systems, and build expertise in climate and ESG reporting. Firms that prepare early will have an advantage in providing advisory and assurance services to clients.Â
Opportunities and Challenges for Accountants
The new climate reporting law creates both benefits and difficulties for accountants and auditors. On the opportunity side it opens new areas of professional growth. Accountants who build skills in ESG and sustainability reporting will be in high demand. Companies will rely on them to integrate climate data with financial information and present it in a clear reliable way. This can help accountants position themselves as trusted advisors to management and boards.Â
Audit firms will also gain new opportunities. Just as financial statements are audited, climate disclosures will need assurance. Firms that invest in training and tools for climate assurance can develop new service lines and strengthen their market reputation. For young professionals this is a chance to work on future focused areas rather than only traditional financial reporting.Â
However challenges are also significant. Many accountants are not yet trained in climate data, emission measurement, or sustainability standards. Collecting accurate Scope 3 emissions, for example, can be extremely complex because it involves suppliers, partners, and even customers. Accountants will need to collaborate with scientists, engineers, and sustainability experts, which is not something the profession has traditionally done.Â
There is also the challenge of costs. Building internal systems for climate reporting, training staff, and hiring consultants will add expenses for companies. Accountants must balance compliance with efficiency, ensuring that the process does not become a heavy burden on businesses.
Overall, the law reshapes the accounting profession. Those who adapt quickly will find many new doors opening, while those who resist change may find themselves left behind.
Global Context and Comparison with Other Countries
Australia’s move to introduce mandatory climate reporting is not happening in isolation. Around the world, governments and regulators are taking similar steps to bring sustainability into the center of corporate reporting.
In the European Union, the Corporate Sustainability Reporting Directive (CSRD) is already in place. It requires thousands of companies to disclose detailed information about their environmental and social impact. These disclosures are highly structured and cover areas such as emissions, biodiversity, and human rights.
In the United States, the Securities and Exchange Commission (SEC) has proposed climate disclosure rules. Large public companies may soon need to provide detailed reports on climate risks, governance, and emissions. Although the rules are still under debate, they reflect the growing demand for transparency in the US market.
In the United Kingdom, companies listed on the London Stock Exchange are already required to make climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD). The UK government has made it clear that climate reporting is part of its long-term net zero strategy.
In Asia, countries like Singapore and Japan have also started implementing climate reporting frameworks. Singapore Exchange has introduced mandatory sustainability reporting for listed companies, while Japan is aligning with international standards through its Financial Services Agency.
By adopting mandatory reporting, Australia is aligning itself with these global efforts. This ensures that its businesses remain competitive and credible in international markets where climate risk disclosure is increasingly seen as a standard part of financial reporting.
Role of Technology in Climate Reporting
Technology will play a central role in how companies manage the new climate reporting requirements. Collecting and analyzing climate-related data is complex, especially when it involves emissions from supply chains or multiple subsidiaries across different regions. Digital platforms and software tools can automate much of this process, helping companies track their Scope 1, Scope 2 and Scope 3 emissions with accuracy.
Data analytics will also help businesses understand patterns and risks linked to climate change. For example, predictive models can estimate how extreme weather events may affect operations or financial performance. Automation reduces human error, ensures consistencyy and makes it easier for accountants and auditors to verify information. In the coming years, technology will not only make climate reporting more efficient but also more reliable for stakeholders and regulators.Â
Investor Expectations
Investors are one of the strongest drivers of climate reporting. Large institutional investors, asset managers, and banks are increasingly demanding that companies disclose their climate risks and sustainability performance. They need this information to make informed decisions about long-term value and risk.
Transparent climate reporting improves access to capital. Companies that provide clear, reliable disclosures are more likely to attract investment, while those that fail to do so may face higher financing costs or reduced investor confidence. For businesses, this means that climate reporting is not just about compliance but also about staying competitive in global markets.
Training and Capacity Building
One of the biggest challenges in implementing climate reporting is the skills gap. Many accountants and auditors are not yet fully trained in ESG and sustainability frameworks. To address this, professional bodies such as ACCA, CPA, and ICAEW have started offering training modules and continuous professional development (CPD) programs focused on sustainability accounting.
Companies will also need to invest in internal training for finance teams, auditors, and managers. Building this capacity ensures that organizations can meet reporting requirements accurately and on time. Accountants who gain these skills will position themselves as valuable assets for their employers and clients, opening new career opportunities in the growing ESG field.
Impact on Corporate Strategy
Mandatory climate reporting will push companies to integrate sustainability into their overall business strategies. Reporting is not just about publishing numbers but also about showing how the company plans to manage risks and seize opportunities in a low-carbon economy.
For example businesses may need to rethink their supply chains to reduce emissions shift to renewable energy sources, or invest in green technologies. Firms that adapt early may not only comply with regulations but also gain a competitive advantage. Customers, investors, and regulators are all paying closer attention to climate strategies which means that sustainability is now part of long term business survival.Â
Assurance and Audit Standards
Just like financial reports are subject to audit, climate disclosures will require assurance. Investors and regulators need confidence that the information companies publish is accurate and reliable. This will expand the role of audit firms, who will need to develop expertise in verifying non-financial data such as emissions, climate risks, and governance practices.
International auditing standards are evolving to guide this process. Accountants and auditors will need to learn how to apply these standards in practice, ensuring that climate reports hold the same credibility as financial statements. This shift creates new responsibilities but also opens new service areas for the audit profession.
Conclusion and Future OuT Look
Mandatory climate reporting in australia is a turning point. It connects financial health with climate responsibility. For accountants it means new skills. new services, and new responsibilities. The future of accounting is closely linked with sustainability, and those who prepare will stay ahead.Â
FAQs
1. When does mandatory climate reporting start in AustraliaÂ
It begins on 1 January 2025 for the largest companies.
2. Which companies are covered firstÂ
Large listed companies, financial institutions, and businesses above set thresholds.Â
3. How will smaller businesses be affectedÂ
Medium-sized entities will be included later, and smaller companies may follow in future stages.
4. Why is this reporting importantÂ
It ensures transparency, builds investor trust, and prepares businesses for climate risks.
5. What is the role of accountantsÂ
Accountants will handle ESG reporting, data assurance, and advisory services, making their role more critical than ever .
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