The push towards sustainability has taken a formal turn with Australia’s move to mandate climate-related disclosures. The Australian government’s recent unveiling of proposed IFRS-based climate-related reporting standards is a game-changer for the business community, particularly for SMEs. This initiative is not just about compliance, it speaks to a broader shift towards more sustainable business practices.
As Australian Accounting Standards Board (AASB) Chair Dr Keith Kendall said, “The move to introduce standardised, internationally aligned reporting requirements for large entities will provide Australians and investors greater consistency, transparency and accountability”.
Key takeaways from the proposed standards
1. A new era of transparency
The Australian Accounting Standards Board’s (AASB) initiative to align with International Financial Reporting Standards (IFRS) for climate-related disclosures signals a significant leap towards global standards in environmental accountability. It aims to provide a clear, consistent framework for businesses to report their climate impact, ensuring transparency and comparability across the globe.
2. Timelines for compliance
Under the proposed standards, there’s a phased approach to compliance. Large businesses are on the clock to start climate-related reporting by July 1st, while SMEs have a window until 2025. This staggered timeline acknowledges the varying capacities of businesses to adapt to these changes, offering SMEs ample time to prepare and align their reporting practices.
3. Feedback and finalisation
Currently, the proposal is in a feedback phase, with the outcomes expected in March. This period of consultation is crucial for businesses of all sizes to voice their concerns, suggestions and support for the proposed standards, ensuring that the final regulations are both effective and practical for all stakeholders.
4. Beyond mandatory reporting
For SMEs, this represents both a challenge and an opportunity to redefine their role in the fight against climate change; it’s more than a mere requirement to report. It’s about establishing a comprehensive framework that guides businesses in measuring, managing and disclosing their environmental impact. This approach underscores the importance of not just compliance but also the strategic integration of sustainability into business operations.
Embracing the sustainability reporting standards
I believe that driving real-world impact is a sustainable source of doing better business, which is why I welcome any step forward in progressing how we as a business ecosystem account, measure and report our environmental and social impact. It’s all about putting the ‘G’ back in Environmental, social, and governance (ESG) standards.
The feedback round was completed on 1 March 2024, and I look forward to seeing the outcomes. This is a golden opportunity for businesses to shape the future of environmental reporting and a crucial step in the creation of these new standards. The Thinkless team has actively contributed their insights, and I am eager to see how these contributions are reflected in the practical side of the legislation.
Drawing from past experiences with legislative changes, such as those related to psychosocial hazards, it’s evident that positive intentions and economic and social potential need to be matched with practical efficacy. I am also eager to see what support will be provided to enable organisations to implement and govern this legislation. We at Thinkless are committed to helping businesses integrate environmental impact into their daily operations, making sustainability a natural part of doing business, rather than a reporting afterthought.
A call to action for SMEs
For SMEs, the evolving regulatory landscape around sustainability should not be seen as a barrier but as an opportunity for smarter, more sustainable business practices. This is a chance to lead in the sustainability space, to innovate and to build resilience. Incorporating ESG strategies is no longer optional; it is essential for future-proofing your business. It’s not just about doing the right things, but about doing them right.
