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New laws have passed through parliament forcing public disclosure of a wide range of climate-related information.
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The changes will start coming into force on 1 January 2025.
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Many companies lack the knowledge, data, processes, and digital technology crucial to complying with the new laws.
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The laws require large companies to disclose first and will be progressively rolled out to smaller businesses.
Most Australian companies are unprepared for groundbreaking laws forcing public disclosure of a wide range of climate-related information, including emissions reduction plans and performance, according to energy and sustainability expert Lisa Zembrodt.
“The changes passed through parliament yesterday, 9 September, and will start coming into force on 1 January. They pose a significant challenge for many businesses,” said Zembrodt, the principal and senior director of sustainability consulting business at Schneider Electric.
“This is a positive move which will drive corporate action on climate change and Australia’s journey to net zero,” Zembrodt said. “But many businesses lack the tools and plans that this new era of accountability requires.”
She pointed to Schneider Electric’s ‘Sustainability Index’ survey of corporate decision-makers, released recently, which found less than one in five companies have comprehensive decarbonisation roadmaps, and 40 per cent have yet to start their efforts to decarbonise.
Zembrodt warned that many companies lacked the data and digital technology crucial to complying with the new laws, described by ASIC chairman Joe Longo as the biggest change to corporate disclosure in a generation.
“A large proportion of businesses are failing to grasp the urgency of climate action,” she said. “With these new climate-related financial disclosure regulations, having a credible plan to transition a business to the low-carbon economy is essential.”
The laws require large companies – with turnovers of more than $500 million – to disclose from 1 January and will be progressively rolled out to smaller businesses. They will also apply to superannuation funds with more than $5 billion in funds under management.
Under the changes, companies must include climate-related financial disclosures as part of a new annual sustainability report, including an annual climate statement, an assessment of climate risks, and emissions and reduction targets.
They will also require companies to report on the emissions of their suppliers and customers, effectively widening the impact of the reporting requirements to smaller companies.
“Companies cannot delay action to understand the gap between where they are today and what they need to disclose. A gap assessment is a critical first step. Already we’ve delivered benefit through performing gap assessments and educating executives and Boards. This ensures they understand their responsibilities and allocate the proper resources to addressing both the disclosures and the real decarbonisation actions that must follow.
“These disclosure requirements will drive businesses to invest more in energy management and sustainability initiatives and adopt new technology practices,” Zembrodt said. “Although the upfront costs of implementing energy efficiency and management schemes can be significant, they are outweighed by the long-term benefits such as increased efficiency.
“The ‘Sustainability Index’ found two-thirds of respondents still rely on basic methods, such as energy bills and spreadsheets, to monitor and manage their energy usage. This lack of sophisticated data management tools is impacting decision-making and hindering efforts to improve sustainability, but digital monitoring and control of processes can cut energy use and costs dramatically.”
“The role of digital technology to collect and report on ESG data is critical in meeting these new reporting requirements and managing the net zero transition,” she said.
About Schneider Electric
Schneider’s purpose is to create Impact by empowering all to make the most of our energy and resources, bridging progress and sustainability for all. At Schneider, we call this Life Is On.
Our mission is to be the trusted partner in Sustainability and Efficiency.
We are a global industrial technology leader bringing world-leading expertise in electrification, automation and digitisation to smart industries, resilient infrastructure, future-proof data centres, intelligent buildings, and intuitive homes. Anchored by our deep domain expertise, we provide integrated end-to-end lifecycle AI enabled Industrial IoT solutions with connected products, automation, software and services, delivering digital twins to enable profitable growth for our customers.
We are a people company with an ecosystem of 150,000 colleagues and more than a million partners operating in over 100 countries to ensure proximity to our customers and stakeholders. We embrace diversity and inclusion in everything we do, guided by our meaningful purpose of a sustainable future for all.
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