Mandatory climate reporting, which is anticipated to be phased in across Australia commencing 1 January 2025, will pose particular challenges for retail businesses.
Although it initially only hits big business, suppliers to these big businesses must be armed to provide data and respond to queries, according to retail specialist ESG lawyer Emma Peters.
“The complexity of this task is born out by the number of suppliers to the two big supermarket chains,” she says. “Coles claims to have over 9000 suppliers, while Woolworths says it has double that with 18,000.
“Like the Modern Slavery Regime, the new climate reporting is required not only for the entity itself, but will also require engagement from suppliers, who are included in what we refer to an entities Scope 3 emissions.”
Amendments to the Corporations Act have been introduced to make climate related financial disclosures mandatory, phased in from 1 January 2025. Such disclosures must be made in an annual report, with areas from climate governance, strategies, metrics and targets to setting out emissions. Initially, only larger entities will need to comply, with a phased in approach that will include businesses over $50 million by 2027.
Ms Peters says that in a speech earlier this year, ASIC Chair Joe Longo had observed that over the next few years more than 6000 entities in Australia would need to report under the new regime and especially for smaller business, this was creating some understandable apprehension.
“The important thing is that retail business don’t bury their heads in the sand,” she says. ‘There is a range of data software emerging that is helping with this task which will ultimately become business-as-usual.”