Welcome first step in mandatory reporting, but financial disclosures alone won’t increase ambition and accountability

In major progress, new laws passed the Senate this week requiring mandatory climate disclosures to commence in the new year.

The laws will create a significant increase in transparency, but alone won’t drive the higher ambition and accountability that is urgently needed to see businesses decarbonising rapidly in line with climate science.

In the new year, businesses will need to analyse the risks of a warming world and opportunities in the energy transition, but will not be required to change their emissions, just the means by which they report them.

Australia still has a significant climate integrity gap – where net zero pledges are frequently unsubstantiated, lack credibility or are not 1.5 degrees aligned. ACCC is reporting a rise in corporate greenwashing and misleading claims and 30% of Australian companies do not intend to meet their own stated climate targets.

The lack of science-aligned business climate action is the achilles heel of Australia’s emissions reduction efforts. To drive greater climate leadership from businesses, the Australian Government must complement the new disclosure regime with an ambitious 1.5-aligned NDC, mandatory science-aligned transition planning, well-resourced regulators, and rules that stop greenwashing and close integrity loopholes.

Without further measures focussed on swift decarbonisation, company disclosures alone do not change the 'business as usual' approach. And where this includes greenwashing, these new laws suppress public action and accountability for the next three years.

Business lobbying secured a legal immunity carve-out in the climate disclosure laws that protects corporations who make false or misleading statements from any third-party legal action for three years. Continuing the lobbying efforts of companies obstructing Australia’s transition to net zero as found in a recent Climate Integrity report.

The integrity of the disclosure framework now solely rests with ASIC, Australia’s embattled corporate watchdog who must now use all their powers to ensure public trust in corporate climate reporting.