HR's guide to navigating the new mandatory climate reporting standards / Mandatory climate reporting is here: How ready is your organisation?

Forget to think about how your organisation impacts the climate. 

In the race towards net zero, the Australian government has adopted a new mandatory climate reporting regime—with new legislation under the Corporations Act compelling large organisations to play their part and disclose climate-related financial risks as early as 1 January 2025. 

I mean, it’s no real surprise. The growing interest in climate issues in Australia has organisations like a tidal wave, and it’s driven the biggest changes to financial reporting and disclosure standards in Australia in the past 20 years. 

Look, some organisations are thinking seriously about the climate, integrating sustainability into their strategies and operations. Some have started measuring their emissions, setting targets, and aligning with reporting standards. But others haven’t yet taken significant steps, leaving them at risk of falling behind in compliance and reputation.

And now regardless of where you personally stand on the issue climate issue, organisations will be required to make climate disclosures in their financial report. 

Here’s what HR leaders need to know to get their organisation ready.   

The nuts and bolts 

If your organisation is currently required to prepare a financial report under Chapter 2M of the Corporations Act, you will need to submit a report or your organisation will face penalties. 

However, when your organisation is required to submit the report will vary, depending on the the revenue and number of employees. See the below table for a quick guide to determine the urgency of when you need to get a move on. 

So if you’re part of a small to medium organisation and are exempt entirely from lodging financial reports under Chapter 2M of the Corporations Act 2001, you won’t be required to prepare a report. 

But if you’ve determined that you’re required to prepare a climate report, here are the steps HR should take to prepare your organisation to ensure it meets the climate reporting requirements. 

Determine clear accountabilities

First things first, make sure legal is across this. Because if it’s come to your desk first, that’s probably not a good sign.

Ensure the key stakeholders from finance, operations, IT, and the executive are across what needs to be done. Take it upon yourself to define roles and responsibilities to ensure everyone is accountable. Because it’s important that people know who is responsible for what, and who will be making final decisions.  

Consider updating your org chart in your HRIS to include the key responsibilities and timeliness too. 

Assess your organisation's risk profile

Once you’ve determined who is responsible for different parts of the reporting process, determine if your organisation is (or isn’t) considering the climate in your operations and overall strategy.

You need to have an understanding of what the risks and opportunities are, and how they fit into your organisation. 

To kick things off, ask questions like: How is management overseeing climate right now? Do you have a transition plan to reduce emissions? 

Once you’ve identified how your organisation’s operations, reputation, or financial performance impacts your climate risks, ensure these risks are integrated into governance and strategy planning. 

Assess your capabilities and readiness 

You should also be prepared to work with management and heads of each respective department to navigate the tricky exercise of moving and deploying employee resources to ensure your organisation can undertake the practical steps for reporting on climate targets.

One of the big areas that you should encourage management to get on top of is data. 

A big part of the reporting requirements relates to your organsations scope of emissions. So to be able to report your emissions, you need to have the data, either within your organisation or be able to get it from your suppliers or customers. In some cases, the measuring tools may not be very sophisticated. So, you need to put arrangements in place to facilitate acquiring that information.

So an assessment will help pinpoint weak data points, ensuring your organisation is well prepared to comply.

Update policies and systems

This is going to usher in a big cultural shift in corporate Australia around sustainability. Right now these changes probably feel quite jaggering, but eventually they will feel like “business as usual”. 

Be aware that if climate and corporate sustainability aren’t a big part of your organisation's day-to-day thinking, it will be quite difficult to meaningfully assess the risks and opportunities of climate or other sustainability topics. 

You’ll need to think about how, and if travel and remote work policies currently co-exist with sustainability goals, and if they don’t make a plan to align them. The urgency of this will of course depend on when your organisation needs to meet its reporting requirements.

As already suggested, update your HRIS to streamline data collection, reporting and key employees so you can keep the right people accountable. And use the HRIS for regular tracking and reporting of these targets. Consistent monitoring allows for timely adjustments and demonstrates the organization's commitment to sustainability.

Educate and engage employees

Finally, conduct training sessions to build awareness and capability at all levels of the organisation. 

Communicate the importance of sustainability initiatives and how employees can contribute. Engaging employees fosters a culture of sustainability, encouraging collective effort towards achieving climate goals.

The steps you take now, getting everyone on board, fixing weak spots, and making sustainability a part of the culture communicate to stakeholders that your organisation is ready for what’s next.