26 August 2024
Australia's sustainability reporting framework is now officially in place. Following Royal Assent of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 in September, this landmark legislation mandates climate-related financial disclosures and aligns Australian law with international standards that are already followed in Canada, the UK, the EU, New Zealand, and Japan.
Starting with large companies and financial institutions, reporting on climate-related financial disclosures will be required from 1 January 2025, and many are still grappling with how to interpret the disclosure requirements, let alone effectively manage their systems and process to ensure compliance.
“Climate-related disclosure is different to other forms of disclosure, and for this one you really don’t want to start out with a poor governance framework,” said Andy Moy, Vice President of Objective Keystone. “You're applying a precautionary principle where the data and scenario modelling will be evolving for decades to come. This means that what you state this year will likely need to be re-stated in future years. And that presents some unique challenges.”
Australian headquartered tech company Objective Corporation (ASX: OCL), with its software solution Objective Keystone, has been at the forefront of helping financial service organisations manage their regulated disclosure for over 10 years. With more than 30 financial services clients across APAC, including 12 of the 15 largest Australian superannuation funds, Objective and its consulting partners are uniquely positioned to support organisations in navigating this new regulatory landscape.
When addressing the new compliance requirements Objective is advising companies that how you reach the disclosure statement is just as important as the point-in-time statement itself.
“Climate-related statements are made based on the best available climate data and scenario modelling at that time. Think of it as a chain of knowledge that results in a statement being made. When the early links in the chain of data and scenario modelling improve you effectively invalidate any prior statement.
In this way it is more like a scientific process than a financial reporting process but it’s essential to address otherwise you’ll be unable to evaluate progress from one year to another. Our recommendation is to implement a system that recognises this need so that when you need to re-baseline you understand what is affected. Go into it thinking you’ll need to re-state and you’ll have the right mindset,” said Moy.
Meeting rising consumer demand for transparency
The rise of public awareness around climate change has driven increased demand for credible, high-quality climate-related financial disclosures. Shareholders and the general public at large are looking for transparency, and businesses need solutions that can streamline reporting to ensure that climate risks are disclosed in line with international standards and public expectations.
“At Objective, we know what good disclosure looks like. As we move into a period of regulatory change, it’s essential for businesses to get ahead and prepare for these new requirements,” added Moy. “We’re here to help organisations minimise the risks associated with climate-related disclosure and get governance right the first time.”
Objective Corporation leading the way in compliance and governance
Objective supports its customers through these regulatory changes by providing innovative, reliable, and scalable software together with best-practice workflow. Compliance and governance are at the core of Objective Keystone and is demonstrated by the platform’s widespread uptake in regulated industry and the public sector.
“We are committed to helping our clients meet these new requirements with confidence,” said Moy. “Our proven track record means we know what it takes to deliver accurate, regulator-ready disclosure to align with the new legislation.”
About the Act
Under the Act, relevant entities must disclose their climate-related financial risks, opportunities, and plans according to the new Australian Sustainability Reporting Standards (ASRS) issued by the Australian Accounting Standards Board (AASB). The first of these standards, AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information (voluntary) and AASB S2 Climate-related Disclosures (mandatory), were also released in September 2024.
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About Objective
Digital governance. Stronger communities.
We create software that makes a difference. Using Objective software, thousands of financial services and public sector organisations are shifting to being completely digital. Where our customers can work from anywhere; with access to information, governance guaranteed, and security assured.
Innovation is our lifeblood. We invest significantly in the ongoing development of our products to deliver outstanding solutions to the public sector and regulated industries.
The result - stronger national and community outcomes; and accountability that builds trust in institutions.
