[Financial Software For Mac Australia
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Following two rounds of consultation, the Australian Government has released an exposure draft of the Treasury Laws Amendment Bill 2024: Climate related financial disclosure (Draft Bill) which would introduce mandatory, internationally-aligned climate-related financial disclosures from the 2024/25 financial year. The Draft Bill has been released for consultation until 9 February 2024.
If passed, the Draft Bill will establish a regime that requires entities that meet statutory sustainability reporting thresholds to report and maintain records regarding climate-related financial risks and opportunities, including in respect of greenhouse gas emissions, governance, risk management and emissions reduction targets.
Simply put, if enacted the Draft Bill would require a company, disclosing entity, registered scheme and registerable superannuation entity to prepare an annual sustainability report for every financial year in which it satisfies the sustainability reporting thresholds set out in the Bill.
The Draft Bill proposes to introduce this reporting obligation in three groups, or phases, over a four-year period based on revenue, assets, number of employees and whether the entity has reporting obligations under the National Greenhouse and Energy Reporting Act 2007 (NGERA).
The Draft Bill also enables regulations to be made that empower the Minister to set different sustainability reporting thresholds for Group 3 entities, and a different threshold asset value amount for Group 2 asset managers.
The Minister may also direct that the annual sustainability report contains statements relating to 'matters concerning environmental sustainability'. While the Draft Bill does not define 'environmental sustainability,' the Government's first consultation paper acknowledged that the reporting regime may need to adapt to international developments in sustainability reporting. This power was clearly included to expand the scope of sustainability reports in the future to meet international market expectations and government priorities, as they evolve.
To reduce the initial reporting burden for reporting entities, the Draft Bill proposes that sustainability reports are exempt from the obligation to report scope 3 greenhouse gas emissions for the first reporting period.
The Draft Bill also proposes limited immunity from any action, suit or proceeding against an entity that makes disclosures in its sustainability reports about scope 3 emissions or scenario analysis for the purpose of complying with a sustainability standard between the transitional period of 1 July 2024 and 30 June 2027. Notably, this protection does not apply to statements about scope 3 emissions made outside the sustainability report, nor does it apply to criminal proceedings or to certain civil proceedings brought by the Australian Securities and Investments Commission.
Annual sustainability reports are proposed to be audited in accordance with auditing standards, although the financial years prior to 1 July 2030 the auditor is only required to review and report on climate statements relating to scope 1 and 2 emissions of greenhouse gases. These reviews must also be conducted in accordance with auditing standards.
The first two of these draft standards are based on the equivalent International Financial Reporting Standards (IFRS), subject to a number of modifications adapted to the Australian context. More information about the review and how to make submissions on the draft standards can be sourced here.
Consultation for the Draft Bill is currently open, and submissions will close on 9 February 2024. It is anticipated that Bill will be introduced into Federal parliament later this year. While organisations that already report against TCFD or ISSB Standards are likely to be reasonably well placed to prepare to comply with the new legislation, it will be very important for organisations to establish whether they would be required to comply with the new reporting regime and start implementing the systems and capabilities to comply with the new laws.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
This paradigm shifted with the onset of rapid interest rate hikes in 2022, heralding a New Monetary Order. With the first major rate tightening cycle in more than 20 years upon us, it is natural to question how the financial sector and broader economy will be impacted. To understand this, we need to revisit how the Low for Long period has shaped the Australian financial sector and the provision of credit.
These regulatory changes, combined with monetary policy and other factors, played an important part in reshaping bank balance sheets. Banks doubled down on mortgages, which grew to about 60% of total loan assets, while reducing exposure to riskier portfolios such as commercial real estate and unsecured consumer lending. This portfolio movement shows a steady decline in risk weights since 2009.
Since the global financial crisis and especially during the COVID-19 pandemic, there has been a significant increase in bank deposit funding, caused by regulatory changes and aided by monetary policy, which led to significant growth in domestic savings. The introduction of the liquidity coverage ratio was first proposed in 2010 and came into effect in 2015. The net stable funding ratio was proposed in late 2009 and became fully implemented in 2018. These regulatory changes in response to the crisis encouraged banks to reduce their short-term wholesale debt funding and replace it with increased deposits. Deposits now comprise 60% of bank funding, up by a third from 2008. Given the stability of deposit funding, this supported balance sheet growth.
The Australian financial system has been significantly reshaped over the past 15 years, with regulation making the system safer. Australian consumers and businesses expanded their borrowing from the global financial crisis period until 2022, causing bank balance sheets to balloon. However, with a New Monetary Order underway, the tide is turning fast, and banks are under pressure. Where majors retreated from portfolios, other lenders have established a stronghold that will be hard for majors to dislodge as they search for growth.
Australia and other developed economies around the world are on a path into unknown territory regarding monetary policy. The New Monetary Order presents a set of unique challenges and opportunities to financial institutions that will require them to reactivate long-forgotten muscles and develop new ones. While the forces that will shape the New Monetary Order in Australia are already visible, the playbook is still being written each day. It will look different from the playbook of the past decade.
Our job here at the Reserve Bank is to serve the community. The Parliament of Australia has given theReserve Bank some very important responsibilities. It is our duty to promote the economic prosperity andwelfare of the people of Australia, both now and into the future. We do this in many ways, including bysetting monetary policy to maintain price stability and full employment, by contributing to theefficiency and stability of the payments system and the stability of the financial system, and by bankingthe Australian Government and providing the nations banknotes.
We also operate the payment system that is at the centre of the movement of money in Australia. When moneygoes from one bank to another, say when you pay a bill to somebody who banks with a different bank, themoney comes through the Reserve Bank. We are also constantly looking at innovations to provideAustralians with the most efficient and secure ways to pay. For example, we worked with the banks todevelop the New Payments Platform, which allows people to make payments in close to real time,24 hours a day, 7 days a week. And we are looking at how the nature of money and the paymentssystem could evolve as technology changes.
We are the banker for the Australian Government. So, when you get a Medicare refund, pay your tax orreceive a refund, those transactions occur through the governments bank accounts here at theReserve Bank. Its the same if youve ever needed a disaster relief or other support payment,perhaps during the COVID-19 pandemic, floods or bushfires. We know that manypeople rely on these payments, and we feel privileged to partner with the government in getting thesevital payments to you quickly and reliably.
A lot of research, analysis, innovation and support is required to deliver all of these functions. We doall this with a bit over 1,500 people. Most of us are located here in Sydney. But we have a bankingbranch in Canberra and offices in Brisbane, Melbourne, Adelaide, Perth, Beijing, London and New York.
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