In the final episode of The Third Wheel for 2024, Tim Stutt and Mel Debenham reflect on the year’s ESG developments and look ahead to 2025. They discuss the recent governmental response to the statutory review of the Modern Slavery Act 2018 (Cth); the winding path of nature positive reforms in Australia; preparations ahead of the first year of reporting under the new climate reporting regime; and the growing focus on nature-related disclosures. The episode closes with their thoughts on a possible pendulum swing towards greater scrutiny of proposed ESG regulations moving forward, as regulatory fatigue sets in and having regard to changes in sentiment locally and abroad.

How can companies prepare for the assurance requirements when they’re still a moving target in and of themselves…?

In this episode, we talk about the current proposal from the Australian Auditing and Assurance Standards Board (AUASB) for phased assurance (with consultation open until 3 May 2024). We also talk through some practical steps that companies can be taking now to prepare for assurance of climate reporting.

The process to test and verify the integrity of climate-related information will be critical in ensuring public disclosures match internal practices, and that claims can be substantiated if challenged.

As well as being a baseline expectation of the board, a thorough verification process will be important to substantiate claims and underpin assurance. In this episode, we talk about verification approaches, key learnings so far, and linkages to more fulsome auditing of reports in due course.

Climate-related metrics and targets are already a key area of focus for stakeholders, but under the new regime there will be more granularity than has been disclosed in the past.

The ASRS metrics & targets pillar requires companies to take the leap towards granular quantitative disclosures (including in relation to Scope 3 emissions). In this episode, we talk about the need for a deep understanding of the related metrics, assumptions, interim targets and contingencies and how they factor into a company’s position and prospects.

Disclosure under this pillar is not just headline statements and overarching direction. These mandatory climate-related disclosures will mean that a company’s “strategy” will need to include comprehensive disclosure of how climate considerations are integrated into decision-making.

The ASRS strategy pillar requires companies to focus not just on its transition plan and overarching strategic pathway for the company, but also how climate-related risks and opportunities are expected to impact on business model, financial position/performance and value chain. In this episode, we talk about the ways in which climate impacts, risks and opportunities will inform your disclosed strategy and prospects, including their linkages to planning and decision-making.

Board and management oversight of climate issues is not a new concept, but deciphering and disclosing how this occurs in practice is often a challenge.

The ASRS governance pillar requires quite granular disclosures of the board and management’s role in overseeing climate-related risks and opportunities. In this episode, we talk about how to articulate accountabilities and reporting ‘flows’ within the business, in a way that will support your disclosures longer term.

Board and management oversight of climate issues is not a new concept, but deciphering and disclosing how this occurs in practice is often a challenge.

The ASRS governance pillar requires quite granular disclosures of the board and management’s role in overseeing climate-related risks and opportunities. In this episode, we talk about how to articulate accountabilities and reporting ‘flows’ within the business, in a way that will support your disclosures longer term.

The new reporting regime will be a prompt for companies to critically assess whether existing governance arrangements are ‘fit for purpose’ (and disclosure) in respect of climate impacts, risks and opportunities.

In this episode, we talk about how companies are stress-testing their governance arrangements, reconsidering the division of responsibility, board and management skill sets, and updating current governance documents (e.g. charters, agendas).

Given the scale of the exercise to report against the new climate reporting regime, what sort of foundational steps should companies be considering now?

In this episode, we share our insights into common pain points and suggested focus areas to help identify aspects of reporting for front loading, ahead of the new regime commencing.

Now legislation for Australia’s new climate reporting regime has finally been introduced into Parliament, what impact will it have for corporates?... (and when?).

The new climate reporting regime is likely to require a significant uplift in corporate reporting – and will require considerable resources and effort over the next 12-18 months. This episode talks about how the regime will phase in, and how it might impact companies in practice.