Written by Paul Himberger at Hip V Hype
01 July 2025 kicked off the reality of mandatory climate reporting in Australia.
Having recently presented on this topic at Urbanity 25 on the Gold Coast, the silence from the audience was either a reaction to my presentation skills, or a lack of awareness from organisations around this reality. While I hope it’s the latter, my general feeling is that most organisations haven’t unpacked the requirements and aren’t preparing for the reality of this new regulatory requirement. This Sustainability Insight reinforces a fast approaching regulatory reality that requires strategic foresight to maximise opportunity and minimise risk.
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures Bill) introduced changes to the Corporations Act 2001 at the start of 2025, requiring organisations to disclose climate-related risks alongside annual financial statements. Individual states such as NSW and VIC have followed suit for those in the public sector.
Over the next three years, a tiered approach will bring a larger cohort of organisations into these reporting requirements. The litmus test for an organisation is a ‘group’ threshold assessment of consolidated revenue or consolidated gross assets of a certain value as well the number of employees. Estimates suggest that around 1,000 organisations will be captured this year under Group 1, rising to nearly 3,000 in 2026 (Group 2) and well over 10,000 organisations by 2027 (Group 3). Chances are, you’ll be one of these organisations.
Even if you think you might not be captured under these first three groups, you may be part of another organisations supply or value chain that is required to report. This represents a business risk if your organisation doesn’t fully consider how climate might affect operations. Remember: your Scope 1 and 2 emissions are someone else’s Scope 3 and being on top of climate could be the competitive advantage needed to grow!
Undertaking a materiality assessment, something we do with our clients, can be a simple and cost-effective way to start to understand what is important for your organisation and which of these reporting requirements are of most concern to your operations. I’ve always said: if you’ve ever kept a petrol docket, you are measuring Scope 1 emissions, while anyone with an electricity bill is tracking Scope 2. Doing better doesn’t require a fundamental shift. Short, sharp action can be incredibly helpful – reach out if you’d like some ideas on where to start.
If you are a reporting entity, you will be required to disclose material information about the climate-related risks and opportunities that could be reasonably expected to affect its prospects. With the growing frequency and severity of climate-related events, the burden of ‘foreseeable’ can no longer be ignored, nor is doing the bare minimum perceived by stakeholders as doing enough. Businesses that use mandatory reporting requirements as a strategic opportunity to add value are the ones best able to withstand the shocks and stresses resulting from climate risks.
This does not mean however needing to model and assess dozens of risks all at once. Often, we start with a key, known risk (for example extreme heat stress due to lack of tree canopy or well-insulated housing) and take an organisation through the process of identifying the key risk, developing a methodology to assess that risk, understand the financial, social and environmental implications and establishing an action or program to respond. Then build to the broader list of risks. Framing climate risk as a business risk can be one of the key drivers of success. Deriving this value is the key to accelerating action.
Taking a holistic view of your business, the reporting requirements centre action on four key pillars:
- Governance: The processes, skills and capabilities within the organisation to address climate risk
- Strategy: Weaving climate risk and opportunities across business decisions over the short and long-term
- Risk Management: Ensuring climate risks sit alongside other enterprise risks with actions identified
- Metrics & Targets: Establish appropriate material matters, benchmarks and set goals
While emissions reporting continues to remain a focus (and in particular Scope 1 and Scope 2), there are increasing legal obligations to consider physical climate risk in operations. Climate adaptation can no longer be seen separate to climate mitigation – Net Zero Plans are starting to merge with Climate Risk Plans. Directors of organisations can be held personally liable for not addressing known climate risks (including ones they weren’t across but should have been).
Beyond physical risks, organisations are increasingly needing to consider the financial implications of other climate-related risks (both at their corporate level as well as at the project level) such as:
- Insurance: ranging from higher premiums to uninsurable assets
- Transition: increased cost investments in green products, lower carbon materials and renewable energy
- Litigation: greenwashing claims for over-representing progress, while not delivering action
Now to be clear, we don’t believe that mandatory reporting or disclosure will solve the climate crisis, nor be a substitute for real action, but it can certainly help organisations to change for the better while retaining a competitive advantage. Pledges, commitments and good will has so far been ineffective. Setting clear, actionable initiatives and measuring progress against them can help push industry in a positive manner.
To this end, one of the benefits we advise our clients on of this tiered approach to mandatory reporting is the ability for their organisation to plan ahead and map out the actions required for either eventual reporting, or to support evolving maturity in their supply chain. Essentially a Roadmap for what you need to do. Most organisations are already responding to climate risks, even if they don’t know it. Adding HVAC to a building with proper filtration can support bushfire resilience through screening out smoke. Installation of batteries can not only support decarbonisation but adaptation after a power outage is the most common reason given by purchasers, not net zero. At HIP V. HYPE, we look to reframe problems into opportunities to advance climate response understanding that this can unlock value and position organisations as industry leaders.
By establishing a roadmap, organisations can evaluate their ‘current state’, cataloguing existing climate response within the organisation, while planning a future work program to address gaps. This could include:
- Building the capability of the Board and Executive with climate literacy
- Updating relevant business charters, risk management frameworks and strategic directions with climate-specific inclusions
- Establishing targets for actions and the metrics by which to measure progress
There’s a saying that the best time to plant a tree was 20 years ago and the next best time is today. We can’t afford to look back in 20 years and lament not doing anything. As this space continues to develop and more organisations start to disclose, we look forward to providing further insights and would be pleased to provide guidance to help you to maximise the opportunity this regulatory reform presents for your business.
