In a significant agenda item, the Australian Accounting Standards Board is set to determine critical elements of the Australian Sustainability Reporting Standards. The agenda focuses on three main objectives:
Deciding on titles for the Australian Sustainability Reporting Standards
The first objective addresses the alignment of Australian Standards with international benchmarks. The proposed title changes reflect consistency with the International Financial Reporting Standards (IFRS) to enhance clarity and global coherence. The working draft now proposes renaming:
AASB S1: General Requirements for Disclosure of Sustainability-related Financial Information (aligned with IFRS S1).
AASB S2: Climate-related Disclosures (aligned with IFRS S2, removing the term "financial" to match international terminology).
The Board will decide whether to adopt these title changes, which seek to avoid confusion while ensuring stakeholders recognise the intended scope of the disclosures.
Consideration of issuing a service standard
The discussion regarding a service Standard stems from the need to reference external documents, such as international climate agreements and industry classification systems. While a service Standard could simplify updates when these external references change, it could also reduce the readability of the Standards. In light of reduced benefits after recent decisions to streamline the legislative process, the Board may opt not to issue a service Standard. Instead, relevant versions of referenced documents could be directly incorporated into the main Standard.
Finalising the voluntary and mandatory Standards on Sustainability and Climate-related Disclosures
The Board aims to finalise two key Standards:
Voluntary standard on General Requirements for Disclosure of Sustainability-related Financial Information: Based on IFRS S1, this Standard will serve as a guiding framework for organisations voluntarily disclosing sustainability-related financial information.
Mandatory Standard on Climate-related Disclosures: Built on IFRS S2, this Standard mandates climate-related financial disclosures, incorporating industry-specific considerations and feedback from stakeholder consultations.
Both Standards have undergone extensive review, with staff recommendations presented for further refinement. The Board’s decisions will include:
• Reviewing stakeholder feedback and identifying additional revisions needed.
• Deliberating on the scope of industry-based disclosure requirements.
• Examining a working draft of the Standards, along with introductory notes, to finalise content.
"You have to do this now. It’s simply not an option to put this off until after legislation has passed, and then scramble to comply. You have to figure out how you're going to marshal data, support and capabilities and start keeping the necessary records now – today." Joe Longo-ASIC Chair.
Background Context
The agenda builds on exposure drafts issued in late 2023 and discussions in mid-2024, where the Board outlined the framework for Australian Sustainability Reporting Standards. These drafts proposed a clear structure for climate-related disclosures, with a focus on aligning closely with international standards while addressing Australia’s unique reporting needs.
The decision-making process reflects a balance between maintaining global alignment and tailoring requirements to local regulatory contexts. Key documents under consideration include marked-up versions of IFRS S1 and S2, staff analyses of stakeholder comments, and project scoping papers for industry-based disclosure initiatives.
Next Steps
The AASB is targeting the end of August 2024 to finalise the Australian Sustainability Reporting Standards (ASRS). However, for these Standards to be enforced with legal authority, the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 is essential. This bill, currently under Senate review, has several proposed amendments pending debate. If the legislation is approved and receives Royal Assent by December 2, 2024, the ASRS Standards will apply to financial years starting from January 1, 2025.
In the meantime, ASIC continues to encourage listed companies to report voluntarily under the recommendations of the FSB Task Force on Climate-related Financial Disclosures (TCFD). This has been ASIC’s position since 2018. ASIC also encourages entities to start developing the necessary organisational and governance structures to support future reporting requirements, including any additional sustainability-related topics that may be introduced in future years.
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