2024 mandatory climate-related financial disclosures
WRITTEN BY SUSTAINABLE TRANSPORT ADVISORY & ASHEVILLE CONSULTING GROUP
Article Full Credit : Partner - Sustainable Australia Fund
Australian 2024 Mandatory climate-related financial disclosures are coming July 1, 2024.
Time to prepare.
Introduction
The Critical Role of Manufacturing, Supply Chain, and Logistics in Decarbonisation
Addressing climate change is an urgent task for all businesses with pressures from suppliers, customers and now ASIC, particularly those in manufacturing, supply chain, logistics, and transportation industries. These sectors bear significant responsibility for carbon emissions and therefore have a crucial role in the drive towards a more sustainable, carbon-neutral economy. In response to these environmental challenges, regulations are being developed to formalise the transition to sustainable business operations and they come into effect starting July 1, 2024, with yearly incremental changes casting the net over small to medium business.
One such initiative is Australia's upcoming mandatory climate-related financial disclosure regulation, set to become law from July 2024. This article will walk you through these new regulations, what they mean for businesses in the manufacturing, supply chain, logistics, and transportation industries, and how Asheville Consulting Group (ACG) can aid you in developing and implementing sustainable strategies for your business and utilising green funding to minimise your outlays and meet your targets.
Current Australian Legislation and Targets
Australia has recently legislated economy-wide emissions reduction targets for the first time in its history. The targets require a reduction of net greenhouse gas emissions to 43% below 2005 levels by 2030 and net zero emissions by 2050. This is in line with the goals of the Paris Agreement, which aims to limit global warming to well below 2 degrees Celsius and pursue efforts to limit it to 1.5 degrees Celsius.
The legislation requires the government to report on progress towards meeting the emissions reduction targets and to develop a long-term emissions reduction strategy every five years. This will involve consultation with stakeholders, including industry, communities, and the scientific community. The government is also expected to develop policies and measures to support the transition to a low-carbon economy, including investing in renewable energy and improving energy efficiency.
The legislation has been praised by many as a necessary and a positive step towards addressing climate change in Australia. However, some critics argue that the targets are not ambitious enough and that more needs to be done to transition to a sustainable and resilient economy. Nevertheless, the introduction of economy-wide emissions reduction targets and the commitment to net zero emissions by 2050 represent a significant shift in Australia's approach to climate change policy.
Affected Businesses – who needs to report?
The mandatory reporting requirements apply to large and medium-sized businesses operating in Australia. Specifically, companies that fall within the thresholds specified by the Australian Securities and Investments Commission (ASIC) will be required to comply. It’s crucial for these organisations to understand their obligations and embrace sustainability as an integral part of their business strategy.
Mandatory reporting is being split into three groups for entities that are required to report under Chapter 2M of the Corporations Act.
| Reporting Group | Time Frame | Criteria (Must meet two out of three)
|----------------- |------------- |----------------------------------------------------------———————————————————————————————————————————————————————------------|
| Group 1 | 2024-2025 | Over 500 employees; Consolidated gross assets of $1 billion or more; Consolidated revenue of $500 million or more.
| Group 2 | 2026-2027 | Over 250 employees; Consolidated gross assets of $500 million or more; Consolidated revenue of $200 million or more.
| Group 3 | 2028-2029 | Over 100 employees; Consolidated gross assets of $25 million or more; Consolidated revenue of $50 million or more.
Countdown has begun
All businesses, regardless of size, must take responsibility for understanding and reducing their greenhouse gas emissions. This includes industries that fall outside the direct remit of the new regulations but indirectly fall under its influence due to their role within larger supply chains. Even if your business doesn’t fall under the reporting regime, the climate impact of your operations will likely affect your financial relationships, for example, in the form of loans. However, ACG offers solutions and support to help your business adapt to these changes and access the funding required for a smooth transition towards sustainability.
From July 1, 2024, Australia's largest companies and financial institutions will begin mandatory climate-related reporting. Gradually, other businesses, including those in manufacturing, supply chain, logistics, and transportation sectors, will come under these requirements. It's vital to understand these new regulations and how they will impact your business and begin your planning and strategies now.
Businesses subject to the reporting requirements must disclose climate-related financial risks and opportunities, including their greenhouse gas emissions, strategies for emissions reduction, and the financial implications of climate change. It is crucial that you seek expert guidance in navigating these requirements, ensuring transparency and accountability for your stakeholders.
The mandatory reporting requirement may appear daunting, but it presents an opportunity for businesses to upgrade their operations and contribute to a greener future. Implementing sustainability measures such as efficient technologies, switching from gas to electricity, environmental upgrades to your buildings and renewable energy sources may seem secondary to immediate business needs, but are now achievable in parallel though 15-20 year green funding loans.
Assistance in sourcing funding to make these necessary investments, thus improving your business's sustainability profile and profitability, while reducing environmental and financial risk can be done by understanding your carbon footprint, to build your business case.
Make it stand out
Get ahead of the curve
Proactive steps towards sustainability include comprehensive carbon footprint assessments, energy efficiency measures, sustainable supply chain practices, employee engagement, and carbon offsetting. ACG is an ESG consultancy that can support your business in these areas, providing end to end services from carbon footprint reporting to strategies, implementations and financial resources tailored to your specific needs.
For manufacturing, supply chain, logistics, and transportation industries, a comprehensive carbon footprint assessment can highlight emission hotspots and help prioritise reduction efforts. Energy efficiency measures can include adopting renewable energy sources and optimising energy use in manufacturing processes and logistics operations.
In terms of supply chain practices, we encourage collaboration with suppliers who share your commitment to sustainability and can assist in implementing practices such as waste reduction, optimised transportation routes, and circular economy principles.
Employee engagement is another crucial factor in fostering a sustainability culture within your organisation, and we can help design training programs and initiatives, empower employees and ensure you meet regulatory and legislative requirements such as the Modern Slavery Act.
For those emissions that are unavoidable, investing in carbon offset projects is a reality. These can include initiatives like reforestation, renewable energy development, and sustainable agriculture, which not only offset your carbon footprint but also enhance your reputation as a responsible business.
5 Steps to reducing your carbon footprint
This section of the paper outlines the ten steps companies can take to become carbon neutral:
Measure Carbon Footprint
Set Carbon Reduction Target
Develop Carbon Reduction Strategy and identify funding opportunities
Implement Energy Efficiency Measures
Switch to Renewable Energy
Reduce Transportation Emissions
Reduce Waste (Circular Economy)
Purchase Carbon Offsets
Engage with Suppliers (Circular Economy)
5. Communicate and Report Progress
What is coming?
The upcoming mandatory climate-related financial disclosure requirement presents an opportunity for businesses in the manufacturing, supply chain, logistics, and transportation sectors to reassess their environmental impact and implement strategies for sustainability.
Next Step
ACG, is a trusted ESG consultant, with a strong background in manufacturing, supply chain & Logistics to support you through this transition, providing strategic guidance, compliance support, and funding assistance to help you achieve your environmental and financial goals.
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