The federal government’s proposed Treasury Laws Amendment Bill 2024 (Cth)(TLA Bill), if passed, will require large listed and unlisted Australian corporations to publish a “climate statement” (in addition to preexisting annual reporting and financial statement obligations). This “climate statement” must be audited like other financial statements.
The Australian Financial Review has described the proposed changes to the corporate reporting regime as “the biggest change in corporate reporting in a generation”.
When and if passed, the legislative amendments will expose companies and their directors to potential regulatory and shareholder actions, which could result in significant damages.
Specifically, in relation to directors, directors will be required to submit a declaration for inclusion in the ‘climate statement’ that the statement complies with the relevant sustainability standards. This declaration has the potential to expose directors to actions for (among other things) breach of directors’ duties.
The authors discuss the proposed legislative amendments below, what risks they may pose to businesses that are captured by the proposed changes to the law, and advise on the practical preparatory steps boards can take now (assuming the legislative change is passed).
