Mandatory Reporting: It’s coming, and you need to start planning now

The Federal Government's new mandatory reporting requirements apply to businesses of all sizes, and it's essential to recognise their impact, the earlier the better.

Government, Energy, Public Relations

Ray Jordan 9 Feb 2024
3 mins
ESG image

If you think the Federal Government’s new mandatory climate reporting requirements are just for the big companies and won’t affect you, think again. 

Yes, the phased-in mandatory reporting requirement will initially impact the big corporates, but it will gradually filter down to smaller businesses including not-for-profits. And it’s coming sooner than you think. 

Until now, social responsibility and environmental reporting has been largely ad hoc. Those who worked it into their annual reporting scorecard have done so largely because they can see the commercial and reputational merit of shining a light on their achievements. Highlighting being a responsible corporate citizen makes sound commercial sense. 

In June 2023, the Australian Department of the Treasury released a public consultation paper outlining the proposed implementation of mandatory climate-related disclosures for Australian entities. 

The proposal would require climate-related disclosures for all entities, subject to size thresholds, to prepare annual reports under the Corporations Act, including private and public unlisted companies.  

This first phase is expected to include companies with more than 500 employees,  more than $1 billion in consolidated gross assets, and more than $500 million in consolidated annual revenue. It is most likely that this will be pushed back to early 2025. 

The intention is to align Australian reporting standards with the most recent international stand for climate related disclosures, but it appears that the Australian standards will also include not-for-profit bodies among other modifications. 

Whatever the size of the entity there will be costs in adapting systems, gathering data and developing reporting of ESG metrics. In addition, the extra scrutiny from all stakeholders of environmental practices and outcomes will require management of brand reputation and investor relations. 

It’s a big job and it can’t be done this overnight. It will take time to ensure your business is thoroughly prepared and your house is in order to meet the exacting standards and requirements of mandatory reporting. 

But there is something else, less obvious, but fundamentally important to your business. And it’s the reason planning needs to start now. It’s to do you’re your ability to continue to retain your business relationship with those customers who are part of the early stages of the mandatory reporting rollout. 

Consider this. You are a small to medium business heavily reliant on your contract to supply bigger customers, such as a supermarket chain.  

Such groups will most likely be caught up in the second phase of the mandatory reporting implementation and therefore will be required to meet rigorous standards to ensure full compliance with the ESG requirements, including measurement and capturing of the impact of carbon footprint from their suppliers. 

And here is the potential rub. Even though your business might not be requirement to implement mandatory reporting until later there is a strong likelihood your customers will require you to provide measurable information on your carbon footprint for them to input into their own disclosures. 

Not being in that position will seriously jeopardise your business. They will probably have no choice but to  look elsewhere. 

So, in effect, the introduction of mandatory climate reporting will impact on just about everyone, big and small. 

Still, we are not there yet, but we will be sooner than you think. You should be including plans now for setting up internal structures to capture and measure your carbon footprint. 

When you look beyond the regulatory requirements, moving to mandatory reporting makes good business and commercial sense. 

Some of the advantages and benefits of mandatory reporting for all companies include greater investor confidence, heightened risk management, great transparency, easier access to capital, stronger brand identity, ability to attract the best people and better stakeholder engagement. 

In essence mandatory climate reporting will be better for society and ultimately better for business. 

But you need to start now. Initially it will be important to set up the systems, processes and data collection procedures. Once established there will be opportunities to develop a communications plan in support of the actions and reputational and brand building.  

How can we help? In the coming months, we will be sharing advice on how to kick-start your journey, and use your data and targets to share your sustainability progress with clients, investors, employees and the public.    

To find out more, get in touch with our Social Impact team. 

Ray Jordan More from author

Ray is one of Western Australia’s most highly-regarded corporate communicators and strategists, recognised for his pragmatic and creative approach to major projects across different sectors.

Before moving to corporate communications, he held executive positions in the media – including the role of Deputy Editor of The West Australian – and has a proven ability to craft messages that resonate with both journalists and readers.

Ray’s knowledge of the media and respected corporate counsel at executive and board levels have been demonstrated through his direct involvement in the sale and subsequent partial public float of BankWest, including the communications program for a Scheme of Arrangement for majority shareholder HBOS to acquire the minority shareholding in BankWest.

After a lengthy career in corporate communications and the media, Ray continues to seek challenges and avenues to vent his creativity. He has written about wine for nearly 40 years, including 22 books – the latest of which is The Way It Was, which chronicles the history of Margaret River.

If he’s not writing or tasting wine, he might be found strumming his guitar to Tom Petty or writing travel features, after his regular morning boxing sessions.

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