Task 2: Response to Exposure Draft
"Shaping the Future of Climate-related Accounting and Reporting in Australia" 

The Australian Accounting Standards Board (AASB) has released Exposure Draft ED SR1 Australian Sustainability Reporting Standards - Disclosure of Climate-related Financial Information to propose climate-related financial disclosure requirements. ED SR 1 was open for comment until 1 March 2024. 

ED SR1 included three draft Australian Sustainability Reporting Standards (ASRS Standards): 

• [draft] ASRS 1 General Requirements for Disclosure of Climate-related Financial Information, developed using IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information as the baseline but with a scope limitation to climate-related financial disclosure; 
   
• [draft] ASRS 2 Climate-related Financial Disclosures, developed using IFRS S2 Climate-related Disclosures as the baseline; and 
   
• [draft] ASRS 101 References in Australian Sustainability Reporting Standards, developed as a service standard that would be updated periodically to list the relevant versions of any non- legislative documents published in Australia and foreign documents that are referenced in ASRS Standards. 
  The following issues were beyond the scope of the AASB's ED SR1: 
   
• The scope of entities that may be required to comply with ASRS Standards 
   
• The legislative date for commencement of compliance with ASRS Standards 
   
• Issues of legal liability/director responsibilities 
   
• The level and type of assurance 
  These issues were dealt with by the Australian Treasury, which held a public consultation on Climate- related financial disclosure: Exposure Draft legislation which closed on 9 February 2024. The Exposure Draft legislation seeks to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 (Cth) to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities. 
  Assume that Australia Post has submitted a response to the AASB's and the Treasury's consultations. As Chief Financial Officer (CFO) of Australia Post you were tasked to draw up a Response (i.e., Comment Letter) for submission to the AASB's and the Treasury's consultations. In your Response, you represent the views of Australia Post on the proposals by the AASB and the Treasury outlined in the following: 
   

1) Proposal Treasury 1: Liability for misleading and deceptive, and other, conduct in relation to the most uncertain parts of a climate statement will be temporarily suspended. That is, where the statement relates to scope 3 greenhouse gas emissions and scenario analysis. This limited immunity applies to statements in sustainability reports prepared for financial years commencing between 1 July 2024 and 30 June 2027. During this time, only ASIC will be able to take action for misleading and deceptive conduct in relation to these types of disclosures. No action, suit or proceeding (collectively 'legal action') is able to be brought against a person or entity in relation to statements about scope 3 emissions or scenario analysis made in those sustainability reports. However, this does not prevent criminal proceedings. The protection applies generally and extends to other forms of alleged misconduct in making climate-related disclosures related to scenario analysis or scope 3 emissions including actions such as negligent misstatement, breach of statutory duty and breach of fiduciary duties. 

 

 

Do you agree with the Treasury's view that limited immunity should apply to statements in sustainability reports prepared for financial years commencing between 1 July 2024 and 30 June 2027? Do you agree with the Treasury's proposal that limited immunity only applies to statements about Scope 3 emissions and Scenario Analysis? Please provide reasons to support your view. 

• 2)  Proposal Treasury 2: Climate disclosures will be subject to similar assurance requirements to those currently in the Corporations Act, which require entities to undertake mandatory audit and assurance of financial reports. The sustainability disclosure report would be audited by the auditor of the financial report supported by technical climate and sustainability experts where appropriate. Under the amendments, an entity required to prepare sustainability disclosure report for a financial year must have the sustainability disclosure report audited and obtain an auditor's report in accordance with the Act. The amendments provide for a transitional period where only limited assurance of sustainability reports is required for reports prepared between 1 July 2024 and 30 June 2030. The auditor's review is limited to the climate statements relating to scope 1 or 2 emissions of greenhouse gases. 
  Do you agree with the Treasury's views that reasonable assurance needs to be provided following the transition period? Do you agree with the Treasury's views that the auditor's review will be limited to Scope 1 or 2 emissions of greenhouse gases? Please provide reasons to support your view. 
   
• 3)  Proposal AASB 1: IFRS S2 does not prescribe the number of scenarios an entity is required to assess to meet the disclosure objective of IFRS S2 paragraph 22. The AASB is proposing to require an entity required by the Corporations Act 2001 to prepare climate-related financial disclosures to disclose its climate resilience assessments against at least two possible future states, one of which must be consistent with the most ambitious global temperature goal set out in the Climate Change Act 2022 (i.e. 1.5°C above pre- industrial levels). The AASB decided to specify the most ambitious global temperature goal set out in the Climate Change Act (i.e., 1.5°C above pre-industrial levels). Consistent with the ISSB's reasons, the AASB decided not to specify the upper-temperature scenario that an entity must use in its climate-related scenario analysis, which mainly assesses climate-related physical risks. 
  Do you agree with the proposal to report against two scenarios? Please provide reasons to support your view. Do you agree with the AASB's view that it should not specify the upper-temperature scenario that an entity must use in its climate-related scenario analysis? Please provide reasons to support your view. 
   
• 4)  Proposal AASB 2: The AASB is proposing to remove from IFRS S1 and IFRS S2 the requirement for an entity to consider the applicability of the standards by the Sustainability Accounting Standards Board (SASB) and references to Industry-based Guidance on Implementing IFRS S2 issued by the ISSB developed based on SASB Standards. This is mainly because (a) the ISSB's public consultation period was too short for Australian stakeholders to appropriately consider the proposals and for the AASB to appropriately apply its own due process; (b) not all of the proposals by the ISSB are related to climate-related risks and opportunities; and (c) the SASB Standards are US-centric and not representative of the Australian or global market. 
  Do you agree with the AASB's views? Please provide reasons to support your view. 
   

When analysing the above four proposals and drafting Australia Post's response, you draw on your learning at Monash University, in particular from the unit ACX3800/5800 Accounting for Climate Change, your own research and the status quo of Australia Post's climate-related accounting and reporting (as documented in its Annual Report). You make sure to express Australia Post's view on each of the above four proposals and provide a justification that supports each view. 

Please note that your Response (i.e., Comment Letter) is addressed to the AASB and the Treasury and thus needs to be in line with professional standards. 

 

 

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1. Stimulating opening & introduction/Excellent structure and transitions/ Impeccable flow of ideas & arguments/ Well pointed conclusion. 
2. Discussion leads to a surprise or original finding 
3. All points/aspects are comprehensively addressed 
4. Original conclusion and/or examples to justify opinion 
5. Use of unusual references to bolster an original argument 
6. Highly convincing case in own "voice" that is undeniably linked to climate change related disclosures and reporting frameworks 
7. Very strong original provided on example case(s) and example case clearly underlines discussion