By Tabish Ahmad, senior research and development chemist at Pental/Dulux Group, and Australian Prime Minister’s Youngest Distinguished Global Talent awardee
AUSTRALIA is poised to implement a transformative climate policy by the introduction of a Mandatory Climate Disclosure Law in a phased manner from July 2024 to 1 July 2027. This pioneering legislation mandates that companies undertake a comprehensive assessment and report on both direct and indirect greenhouse gas emissions. This includes emissions from sources they own or control, as well as those stemming from activities such as the procurement of electricity.
The initiative, is rooted in the Treasury Laws Amendment Bill, aiming to revise update important financial statutes laws. The goal is to ensure align reporting practices which follow international global standards, making the financial system stronger against climate change thereby enhancing the resilience of the financial system to the risks posed by climate change. This legislative effort underscores Australia’s commitment to navigate the challenges and seize using the economic opportunities presented by them in the move towards transition to a net-zero emissions future.
The law is set to be rolled out gradually in phases starting from July 2024, targeting a broad spectrum affecting various entities. Small and medium-sized businesses falling below certain specified thresholds are exempt, although there remains flexibility for future adjustments to these criteria in the future. The legislation aims to promote a culture of transparency, requiring companies to include comprehensive disclosures about climate-related financial risks and opportunities within a dedicated “sustainability report” alongside their annual reports.
This mandatory reporting framework is expected to provide investors and companies with the clarity, and certainty needed to make informed decisions, driving investments in sustainable opportunities. By establishing standardiszed , internationally-aligned reporting requirements, the law seeks to strengthen the financial system foundation for a more robust, sustainable financial system.
In addition to direct emissions, companies will also need to account for indirect emissions, reflecting a holistic approach to understanding and mitigating the impact of their operations on the climate. This includes those emissions from purchased electricity, alongside direct emissions. This holistic approach acknowledges the inter-connectedness of corporate activities and the broader energy ecosystem.
The phased introduction ensures a measured approach, allowing companies ample time to adapt to the new requirements. This approach also reflects the government’s intention to engage with stakeholders , including industry, investors and environmental groups, to refine and enhance the legislation based on feedback and evolving best practices.
Furthermore, the legislation represents an important step towards aligning Australia’s corporate sector with global climate goals and sustainability standards. It signals a broader shift in how businesses approach towards environmental responsibility, moving beyond compliance towards a more integrating strategy that encompasses climate risk management, sustainability and long-term value creation.
As the world grapples with the urgent need to address climate change, Australia’s Mandatory Climate Disclosure Law stands as a testament to the country’s leadership in addressing climate change and commitment to fostering a sustainable future. By requiring companies to be transparent about their climate impact, the law aims to catalyze action and innovation towards in the pursuit of reducing greenhouse gas emissions and building a climate-resilient economy. This isn’t a quick fix for climate change. To be worth the cost for real impact, clear policies to reduce emissions must accompany these financial disclosures. Australia will need to link climate-related financial disclosures to clear policies designed to bring down emissions.
How will this affect Shepparton’s local industries?
Greater Shepparton relies heavily on its diverse industrial landscape, with one of the largest manufacturing resource locations in Victoria leading the way as the largest performing sector. In terms of gross value-added activity, manufacturing is the largest performing sector in Greater Shepparton, generating $514M in 2019. With the introduction of the mandatory climate disclosure law, Shepparton’s industries have the opportunity to embrace sustainable practices and thrive in a changing landscape.
The manufacturing sector, encompassing machinery, textiles and personal care products, can leverage the law to innovate in energy efficiency and waste reduction. By doing so, they not only mitigate environmental impacts but also enhance operational efficiencies and access international markets focussed on sustainability.
Incorporating the mandatory climate disclosure law within Shepparton’s diverse industrial landscape, including its robust agricultural sector, burgeoning manufacturing base, and dynamic food processing industries, offers a bright outlook for regional development. For example, Shepparton’s agricultural enterprises, renowned for producing a significant portion of Australia’s fruits, dairy and cereal products, stand to benefit immensely from sustainable practices. By adopting these sustainable agricultural practices and reporting their climate impacts, these businesses can enhance yield efficiency, reduce environmental footprints, and access new markets that prioritise sustainability.
Similarly, Shepparton’s manufacturing sector, which includes leaders in machinery, equipment, textiles and the ever expanding personal and home care cleaning products; can leverage this law to innovate in energy efficiency and waste reduction. This could not only help in mitigating environmental impacts but also in improving operational efficiencies and opening up international markets focused on green manufacturing.
The food processing industry in Shepparton, a key cornerstone of Shepparton’s economy, can also capitalise on the introduction of this law. Big players in the Australian food sector also have much to gain. Companies can implement energy-efficient technologies and sustainable supply chains, companies can lower costs and appeal to a growing consumer who base that value on environmental stewardship.
By embracing this climate disclosure law, Shepparton’s industries can position themselves at the forefront of sustainable development, enhancing their competitiveness and contributing to a more sustainable future for the region. This transition not only supports the local economy but also sets a precedent for environmental leadership, aligning Shepparton’s industrial activities with global sustainability goals.
Any opinions or views expressed in this article are personal of the author and may not reflect view of any organisation.
