The AASB has released the draft Australian Sustainability Reporting Standards

October 24, 2023
5 minutes
Photo by Nick Dunn

The Australian Accounting Standards Board (AASB) releases the heads up on mandatory sustainability reporting standards, with full draft open for consultation

60 days until Christmas…if you can believe it.

And 0 days until the Australian Accounting Standards Board drops the Exposure Draft to propose climate-related financial disclosure requirements for companies across the country (ED SR1 Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information).

Yes, the 103 page document was released yesterday, it’s now out in the wild for comment until March 2024. You can share your 2 cents by getting involved here.

Key Takeaways

  • Accountants and finance teams: Understand how to account for and report on carbon emissions and tell your clients it’s time to start (also tell them not to stress, because you can help, it’s accounting after all, with actual accounting standards on the way…doesn’t get much more official than that)
  • Businesses: Listen to them👆🏼and just get started.

Ok ok, more key takeaways

Who will have a mandatory obligation to disclose their emissions under this standard and by when, exactly?

🗓 Businesses that have over 500 employees, carry more than $1 billion in assets, and command a consolidated revenue of more than $500 million: from 2024-2025

🗓 Businesses with between 250 and 500 employees, $500 million in assets, and $200 million in consolidated revenue:  2026-2027

🗓 Medium-sized enterprises — over 100 employees; $25 million in assets; consolidated revenue over $50 million: 2027-2028.

But as we know, they need emissions data from suppliers to accurately report against this, so SMBs will undoubtably be tapped on the shoulder for their emissions data.

We see two options, businesses filling in 50,000 different forms with their data every time a customer asks, or businesses incorporate carbon accounting into their standard accounting and reporting and provide a standard GHG report to every suppliers with the relevant information. No prizes for guessing what most businesses would prefer.

What was the general vibe from the first consultation?

Most respondents in the first consultation wanted consistent global reporting, they expressed support for the ISSB’s approach to:

  • use the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (GHG Protocol Standard) as the global standard for measuring and disclosing greenhouse gas (GHG) emissions where jurisdictional GHG measurement standards or frameworks are not already established or required. For example, many respondents highlighted the existing reporting requirements required under the National Greenhouse and Energy Reporting Act 2007 and related regulations (NGER Scheme legislation) and recommended that the AASB works with the Clean Energy Regulator to provide guidance on how the GHG Protocol Standard interacts with NGER Scheme legislation, to avoid duplicate reporting of GHG emissions (Sumday’s database includes the NGER’s one too).
  • require entities to disclose Scope 3 GHG emissions in addition to their Scope 1 and Scope 2 GHG emissions, even though entities currently reporting GHG emissions under NGER Scheme legislation are not required to disclose Scope 3 GHG emissions;
What do the draft standards say about carbon accounting specifically?

They’re essentially based on the ISSB’s IFSR1 and IFSR2 - full blog post about what they have to say about carbon accounting here. In the doc, they then step through exactly how they are proposing to deviate from those standards. The table is copied below and it’s worth noting there a no major propose departures (some global consistency, how good!)

In a nutshell:

  • The reporting company is to report on scope 1, 2 and 3 emissions
  • Disclose scope 2 emissions based on the market based and location based emissions, except for the first three years from mandatory reporting.
Page 49-50 of Exposure Draft

What’s next?

It’s clear there will be mandatory reporting for these companies and it will impact SMBs.

You can up-skill the team in GHG accounting through the Sumday Academy so you know what to do, there’s 18 chapters explaining how to go about reporting on scope 1, 2 and 3 emissions in line with the GHG Protocol. Over 200 accountants, finance and sustainability professionals have gone through this and found it extremely useful.

You can complete a carbon readiness assessment for your client’s to help them understand what is required - example approach you may wish to take is here.

Select software that will help your company or clients comply as you start carbon accounting - check out this guide on what to consider here.