Climate related financial disclosure paper

Climate Related Financial Disclosure paper

Following the establishment of the International Sustainability Standards Board (ISSB) in 2021, whose task was to develop baseline standards (global) for climate disclosure, they released their IFRS Global Sustainability Standards, in June, after 18 months of intensive industry consultation. They state these will “help to improve trust and confidence in company disclosures about sustainability to inform investment decisions”.

Following this release the Federal Government have released the second draft of their Climate Related Financial Disclosure consultation paper, here.This paper will ensure there are mandates for large companies, including the financial institutions, to provide reporting on their climate related plans, risks and opportunities. This will be done through internationally aligned reporting requirements set around specific risk matrices. The alignment of these plans must depict the company’s resilience to the Climate Change Act 2022 ambitions.

The consultation paper proposes:

Mandatory reporting requirements to commence in tiered formation from 1 July 2024, for Australia’s largest companies, who by the 2027 period meet two of the three criteria encompassing revenue >$50m, gross assets of >$25m or 100+ employees at the end of the financial reporting period. These tiers are higher in the front few years.

However, if you do not meet the above, but you are a “Controlling Corporation” under NGERS you would also be mandated to report on the climate disclosure forms from FY25 onwards .

You will be disclosing your scope 1 to 3 emissions as well as governance reports around your climate related risks, how these are identified and managed and where they are in your supply chain. You would also be mandated to disclose the transition plans to the climate targets including all information on offsetting plans.

The government plan to enforce this under the civil penalty provisions in the corporation’s act and therefore the penalties for non-compliance could be significant.

Feedback is sought on this paper by the 21st July 2023 however the line in the sand has been drawn by the government and the likelihood is by the next financial year (FY25) if you meet the criteria this will be a mandated requirement for your business and non-compliance is not optional. As such development of these reporting requirements will be key to ensuing readiness when the final draft is published and enshrined into law.

At Edge2020 our mantra is energy savings with an eye on the planet, we are energy advisory & sustainability consultants. If you need help interpreting and complying with this criteria please reach out for support from our Climate Active registered consultants on 1800 334 336 or info@edge2020.com.au. 

 

Is UFE the UIG of Australia?

Anyone who knew me in my past life in the UK knows that I harped on about Unidentified Gas (UIG) A LOT!

The idea behind UIG is simple, allocate the gas which couldn’t be attributed to a meter in an area across all end users in that area, in which it was used (off-taken). Seems simple right. But when was the last time you actually gave a meter reading? Possibly six months to a year ago? Well that means your off-take (unless you are on a smart meter) is estimated and you will be either over or under on allocated unidentified gas.

Although this seems sensible with everyone eventually giving a meter read and therefore it will all work out in the wash, what exacerbates the issue, especially at the moment, is the extreme increase in the gas price at which these charges are now passed through to retailers and then in turn our bills.

Now what does understating this UK gas usage or allocation have to do with Australia? Well, quite a lot. The system is similar, but not the same.

Following Global Settlements being introduced by AEMO we have started seeing Australia’s version of these charges coming into our bills. We allocate the unidentified – called Unaccounted for Energy (UFE) within each region by the off-takers in that area.

What we are not doing yet, which in the UK’s defense they do there (through XOServe), is take into account those meters which are half hourly ready (smart(er) meters) and therefore their usage should be known. Currently in Australia the offtake in a region will be directly linked to your proportion of an energy being allocated to you and you literally have no say in these charges, despite having updated metering capability.

The sore point of it all is that this is occurring at a time when our electricity market is extremely high and therefore there is a possibility of the combination of large UFEs  being passed through to end users at high prices, with companies having no control over the volume or price it is passed through at. This is leading to significant shocks to companies’ outgoings, as there is little to no visibility on the charge on any given month, and no way to forecast them to budget.

I fear that UFE will become my new soap box issue, and I can guarantee this isn’t the last anyone will hear on this. I am pretty sure I won’t be the only one who will be making noise.

Is this happening to your business? If you feel you need more control of your company’s energy spend, please reach out to discuss joining our Edge Utilities Power Portfolio (EUPP) where we use the power of bulk purchasing to help Australian businesses of all sizes save on their energy bills. Read more: https://edgeutilities.com.au/edge-utilities-power-portfolio/ or call us on: 1800 334 336 to discuss.