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Australian Securities and Investments Commission (ASIC) will offer support to SMEs as they navigate new climate-related reporting requirements starting July 1, 2024. The initiative aims to integrate climate impact reporting into standard financial disclosures and foster sustainable practices. SMEs will need to provide data to reporting entities on greenhouse gas emissions within their supply chains. ASIC will collaborate with SMEs to develop practical guidelines and potentially allow estimated figures for Scope 3 emissions reporting. Business lobby groups and accounting bodies support the rules but caution against burdensome costs for smaller businesses. Australia’s largest companies are already setting sustainability targets for their suppliers, highlighting the ripple effect of the reporting regime. The collaborative approach by ASIC aims to ensure a seamless transition to climate reporting for SMEs while balancing environmental accountability and economic feasibility.
The Australian Securities and Investments Commission (ASIC) will offer support to SMEs as they grapple with new climate-related reporting requirements. According to SmartCompany, this announcement comes amid concerns from the accounting sector that the impending regulations could disproportionately burden smaller businesses. The federal government’s initiative aims to integrate climate impact reporting into the standard financial disclosures required of Australia’s largest corporations. Starting July 1 this year, significant companies will begin to report on their climate impact, with the scheme gradually extending to smaller entities by 2027. This move is part of a wider strategy to quantify and mitigate the effects of climate change, fostering investment towards more sustainable practices. Notably, while SMEs will not be directly mandated to report their greenhouse gas emissions initially, the requirement for larger entities to report Scope 3 emissions—those produced throughout their supply chain—means SMEs will need to provide relevant data to these reporting entities.
Sarah Court, ASIC deputy chair, emphasised the commission’s commitment to collaborating with SMEs. Court assured that ASIC would help develop practical guidelines tailored to small businesses to navigate the new legal landscape. “Once the new laws come into effect, ASIC will work with small business representatives to develop practical guidance for small businesses in relation to the requirements of the new laws and how the new laws may impact them,” Court said. This approach suggests a supportive role by ASIC, easing SMEs into compliance with the added reporting dimensions. The prospect of using estimated figures for Scope 3 emissions reporting at the outset was also mentioned, potentially offering immediate relief from the intricate accounting that detailed reporting would require.
The dialogue surrounding these new measures reflects a broader consensus on the importance of addressing climate change. However, concerns persist about the practical implications for SMEs. Business lobby groups and prominent accounting bodies, including CPA Australia and CA ANZ, have voiced support for the new disclosure rules while cautioning against a burdensome cost-to-benefit ratio for smaller businesses. These organisations advocate for government intervention to streamline information requests and minimise duplication, thereby reducing potential financial strain on SMEs. In anticipation of these changes, some of Australia’s largest companies, such as Coles, are already setting expectations for their suppliers to meet sustainability targets, highlighting the ripple effect of the reporting regime across the business landscape.
As the regulatory and business communities move forward, the delicate balance between rigorous environmental accountability and economic feasibility for SMEs remains a pivotal point of discussion. The collaborative approach taken by ASIC signifies a step towards ensuring that the transition to more transparent climate reporting is as seamless as possible for smaller entities, ultimately contributing to a broader effort to combat climate change through corporate responsibility and transparency.
