On 27 March 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 was introduced before Federal Parliament. If enacted as drafted, it will introduce a framework for mandatory climate related disclosure regime by certain companies.
We have been asked by some charities which are companies whether they are impacted by this proposed disclosure regime. The purpose of this short article is to provide a brief overview of the proposed regime, and its applicability to charities.
What does the Bill do?
The Bill amends parts of the Corporations Act 2001 (Cth), as well as eight other Acts, in order to ‘implement recommendations by the Council of Financial Regulators in relation to Australia’s financial market infrastructure’.[1]
Schedule 4 of the Bill contains the proposed legislation that will introduce the mandatory climate related disclosure regime, and is titled ‘Sustainability Reporting’. Among other matters, it proposes changes to Chapter 2M of the Corporations Act 2001 (Cth).
Chapter 2M of the Corporations Act 2001 (Cth) addresses financial reporting by companies and audit requirements. In particular, Part 2M.3 of that chapter places obligations on various entity types to report to the Australian Securities and Investments Commission (‘ASIC’) each financial year. The proposed changes would add to the recording keeping and reporting obligations by introducing the requirement to:
- keep ‘sustainability records’; and
- prepare and lodge a ‘sustainability report’ each financial year.
The purpose of this is stated to be to establish an internationally aligned mandatory climate disclosure reporting regime in Australia, the intention being to give investors and companies ‘the transparency, clarity and certainty they need to invest in new opportunities as part of the net zero transformation’.[2] ASIC will be responsible for enforcing this proposed regime.
Does the proposed regime apply to Charities?
As drafted, the mandatory climate related disclosure regime will fall within Parts 2M.1 to 2M.3 of Chapter 2M of the Corporations Act 2001 (Cth). In what may offer some relief to charities, the proposed reporting regime will therefore not apply to charities that are registered with the Australian Charities and Not-for-profits Commission (‘ACNC’), as section 111L of the Corporations Act 2001 (Cth) provides that Parts 2M.1, 2M.2 and 2M.3 do not apply to ACNC registered charities.
However, despite the carve out for ACNC registered charities in these proposed changes, the changes reflect a growing concern by governments and the community in general about climate change. It may therefore be prudent for charities to consider the size of their operations, be aware of the reporting requirements that are ultimately introduced within Chapter 2M, and take steps to position themselves to be ready for if such reporting requirements are ever extended to ACNC registered charities in the future.
Vocare Law is well equipped to assist our charity and not-for-profit clients with a wealth of collective knowledge and over two decades experience providing insight and advice in this area. Please don’t hesitate to contact our office if you have any questions on ensuring your charity is able to adequately comply with the ACNC governance standards. Contact us on 1300-VOC-LAW / 1300-862-529 or email: enquiry@vocarelaw.com.au
This article was written by Reece Morrison.
Footnote
[1] ‘Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024’, Parliament of Australia, Summary, <https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r7176>
[2] See the media release from The Hon. Dr Jim Chalmers MP here: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/new-climate-reporting-reforms-stronger-financial-system
