The Australian government plans to make scope 3 emissions reporting mandatory for large businesses as part of new climate risk disclosure rules aimed at aligning with other international markets and improving transparency on corporate decarbonisation strategies.
Under a final policy design open for consultation until 9 February, large companies and financial institutions will need to disclose their climate-related risks and opportunities including scope 1, 2 and 3 greenhouse gas (GHG) emissions within their annual sustainability reports. Scope 1 and 2 disclosure will be required from the first year of reporting, while scope 3 disclosure — covering indirect upstream and downstream emissions — will be mandatory from the second year, according to the draft legislation.
Companies will be arranged in three groups, with the first of them set to start reporting from the 1 July 2024–30 June 2025 financial year. Group 1 entities would include companies meeting at least two of three criteria: more than A$500mn ($334mn) of annual revenues, over A$1bn of gross assets, and 500 or more employees. Group 2 companies would have lower thresholds — above A$200mn of revenues, $500mn of assets and 250 employees — and would start reporting from the financial year starting on 1 July 2026. Reporting for group 3 entities — those with more than A$50mn of revenues, $25mn of assets and 100 employees — would begin from 1 July 2027.
The government is also proposing a three-year liability relief period for companies, for reports issued between 1 July 2025 and 30 June 2028. Under the draft legislation, only the Australian regulator would be able to take action for breaches related to the disclosure of scope 3 emissions and some climate-related forward-looking statements, and measures available to the regulator during that period would be limited to injunctions and declarations.
Companies are currently not required to report their scope 3 emissions under Australia's National Greenhouse and Energy Reporting Act, which is used to measure and report GHG emissions and energy production and consumption. Scope 3 can include emissions within supply chains that occur inside or outside Australia, such as emissions from the combustion of Australian coal or LNG exported to other countries.
The planned climate disclosure regime will bring Australia in line with other jurisdictions, including the EU, the UK, New Zealand and Japan, the government said. Australia had already held two previous consultations on the subject, starting in December 2022. The country plans to reduce GHG emissions by 43pc by 2030 from 2005 levels.
